Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — PUBLIC BUILDING AND WORKS

10, Downing Street and 7, Old Palace Yard (Woodwork)

Mr. J. Wells: asked the Minister of Public Building and Works what steps he is taking to preserve panelling and other woodwork from damage by excessive temperatures due to central heating in buildings under his control, particularly 10, Downing Street and 7, Old Palace Yard.

The Parliamentary Secretary to the Ministry of Public Building and Works (Mr. Richard Sharples): Some shrinkage is occurring at No. 10 Downing Street and 7 Old Palace Yard. This is due mainly to drying out and not to excessive temperatures. The central heating systems incorporate controls to keep room temperatures to around 65 degrees F.

Mr. Wells: I readily accept my hon. Friend's suggestion that this is not due to excessive temperature, but surely there must be some very grave fault in the workmanship or design that drying-out should have caused cracks of the magnitude that are reported and are seen? Will my hon. Friend give the House an assurance that there will be a proper investigation into this and a further assurance that other ancient buildings under the care of his Department are not suffering from similar cracks due to new central heating?

Mr. Sharples: I do not think one wants to exaggerate what has happened. It is only in a few cases where some panels have split and this can be put right with the normal touching up which

will always be required on works of this kind, and making good.

Mr. C. Pannell: If it is something quite minor, as the Parliamentary Secretary suggests, could he not refer it to the National Building Agency, but, if it is as bad as the hon. Member for Maidstone (Mr. J. Wells) suggests, does he not think the whole question of the rebuilding of 10, Downing Street should be referred to the Public Accounts Committee?

Mr. Sharples: No, Sir. I do not think we should exaggerate this. It is only in a few places where one or two panels have split and I think we should always expect this in a major reconstruction such as this.

Mr. Wells: While I accept that that may be the case in 10, Downing Street, which I have not seen, I am daily in 7, Old Palace Yard and cannot accept my hon. Friend's remarks that this is minor cracking of a few panels. It is major cracking in a great many cases. He should look into this far more closely, because hon. Members frequently visit that building and must be disquieted by what they see there.

Mr. Sharples: I shall certainly visit 7, Old Palace Yard myself. I have not seen it, but I certainly will do so.

Kensington Palace (Apartment 1A)

Mr. W. Hamilton: asked the Minister of Public Building and Works why the estimated cost of re-occupation services of Apartment 1A of Kensington Palace has increased from the original figure of £50,000 to the provisional figure of £69,600.

Mr. Sharples: The original figure of £50,000 was a preliminary estimate which was increased to £65,000 before the contract was let in January, 1962, and shown accordingly in the printed Estimates for 1962–63. The additional £4,600 covers increases in wages and in the cost of materials and the estimated final cost of additional repairs, the need for which became apparent only during the course of the work.

Mr. Hamilton: Is not the hon. Gentleman aware that there is a great deal of anger in the country about this shocking


waste of the resources of the country, more especially as it is for people who can well afford to house themselves and, secondly, because there are so many thousands of people in London who cannot find a house?

Mr. Sharples: I do not accept what the hon. Member says.

Mr. Hamilton: Of course the hon. Gentleman does not.

Mr. W. Hamilton: asked the Minister of Public Building and Works what has been the total cost of work done at 1A, Kensington Palace in the three years 1961, 1962 and 1963: and what will be the estimated total cost on completion of the work there.

Mr. Sharples: The total cost to the New Works Subhead of the Royal Palaces Votes in 1961, 1962 and 1963 was £68,000. The estimated final cost is £69,600.

Mr. Hamilton: Can the hon. Gentleman say what steps he is taking to recoup himself from the occupants of this building?

Mr. Sharples: This is a Royal Palace, and repairs and maintenance of Royal Palaces come under the Royal Palaces Vote.

Mr. C. Pannell: We have found in the past that the occupants of these buildings sometimes make a contribution towards them. Why not in this case? We tend to think there is a degree of capriciousness in the selection of decoration and such things as that.

Mr. Sharples: No, Sir. The cost of the boiler house, the boiler equipment, the kitchen equipment and some of the decorations was met privately by the occupants.

Materials (Flammability)

Sir B. Janner: asked the Minister of Public Building and Works, in view of the stress laid on standards of flammability for materials used in walls and ceilings under the new Building Regulations, Command Paper No. 2279, how many machines are in existence in the United Kingdom at the present time for testing the flammability of materials.

Mr. Sharples: The appropriate British Standard lays down the test procedure

for the surface spread of flame on materials used as wall and ceiling linings, and also describes a preliminary test useful for manufacturers. There is one full-scale testing appliance in operation in the United Kingdom, at the Fire Research Station; and I understand that a further appliance, to be operated by a firm of consultants, is being commissioned. I am informed that the preliminary test is operated by about 12 other laboratories.

Sir B. Janner: In view of the drastic nature of these Regulations, is the Minister satisfied that only one of these machines should be available? Surely he must have some arrangement to cope with the Regulations, both those that exist at present and those likely to come into force?

Mr. Sharples: The new Regulations have not yet been published. We have only the report of the Advisory Committee. If there are delays in future my right hon. Friend would certainly be prepared to consult with his right hon. and learned Friend the Secretary of State for Education and Science to see how best to consider this, but at the moment there are not delays.

Industrialised Building Systems

Mr. P. Williams: asked the Minister of Public Building and Works how many industrialised building systems are being used; and how many local authorities employ such systems.

The Minister of Public Building and Works (Mr. Geoffrey Rippon): I regret that this information is not available in the form requested. I understand that more than 300 industrialised building systems have been or are being developed in this country. In 1962–63 some 45 of these were in use by local authorities.

Mr. Williams: Can my right hon. Friend give an undertaking that the increasing use of these industrialised building systems, which most people would welcome, will not in any way jeopardise the employment of those engaged in traditional building methods? Will he go further and welcome the introduction of these new systems?

Mr. Rippon: I certainly welcome the introduction of these new systems, which


we are doing all we can to promote. I can also give an assurance that we do not believe they will interfere in any way with other building work which is being carried on by traditional methods. There is need for both

Services (Living Accommodation)

Mr. Wingfield Digby: asked the Minister of Public Building and Works what progress he has made in the standardisation of living accommodation design for all three Services.

Mr. Rippon: My Ministry and the Ministry of Defence have already agreed on common cost limits and we shall soon have agreed common scales of accommodation. I shall shortly be letting a contract for 2,000 houses to a standard scale to be built by industrialised methods, for use by all three Services.

Mr. Digby: I welcome that reply. What economy in cost does my right hon. Friend expect from having uniform designs?

Mr. Rippon: I did not refer to uniform designs. I referred to a uniform scale. I think I had better wait until. I can announce the details of the contract.

Mr. C. Pannell: Is the Minister aware that when some of us looked at his exhibition at the Ministry of Public Building and Works, some Members of the House expressed the common opinion—there were members of all parties there—that the general difference between officer accommodation and other rank accommodation was too marked? Will the right hon. Gentleman look at this question? There is a degree of palatialness about officer accommodation which is not always apparent with other rank accommodation.

Mr. Rippon: That concerns a number of Departments which have a say in the scales. I think it can be said that the scales of accommodation for both officers and men are now pretty good.

Mr. P. Williams: Will my right hon. Friend give an assurance that, when standardisation of design is achieved, this will enable those producing industrialised housing to compete very fairly?

Mr. Rippon: I do not envisage standardisation of design. I think that the

use of these new methods will enable us to have a wider variety of designs and better designs.

Estimates (Agency Fees)

Mr. Boyden: asked the Minister of Public Building and Works why his Department's estimates for architects', engineers' and other consultants' fees under agency services, Class IX, I, were increased from £50,000 in the 1963–64 Estimates to £710,000 by way of a Supplementary Estimate; and why the estimates are to be increased to £950,000 in the 1964–65 Estimates.

Mr. Sharples: The original draft of the 1963–64 Estimates was prepared partly in the Ministry of Public Building and Works and partly in the three Service Ministries, for those works services we became responsible only on 1st April, 1963. It was not the practice of the Service Ministries to show these agency fees in a separate Subhead. The purpose of the Supplementary Vote was (mainly to transfer sums from other Votes to a single Subhead so that the total expenditure on agency services could be easily identified.
The increase in 1964–65 reflects a larger programme of works services to be undertaken.

Mr. Boyden: Does not this make nonsense of the claim of the hon. Gentleman's right hon. Friend that the amalgamation of the War Department building services with the Ministry of Public Building and Works was done efficiently? How could nearly £¾ million worth of work be overlooked, especially when this was a growing service for which another nearly £¼ million was added in the current year?

Mr. Sharples: No, I do not think so at all. What it represents is a more efficient system of bookkeeping so that we know more accurately what the costs are. It does not represent additional expenditure.

Mr. C. Pannell: Is the idea that a more efficient system of bookkeeping betrays a greater aggregate loss? Is that what the Minister means?

Mr. Sharples: No. This is Service building. What it does betray is that we


know more accurately now what Service building costs. We are accurately costing the agency fees.

Married Quarters, Aldershot

Mr. Boyden: asked the Minister of Public Building and Works why repairs are necessary in the new maisonettes of the Talavera Park Estate, Aldershot; and if he will order an inquiry into the building procedures used.

Mr. Lipton: asked the Minister of Public Building and Works what repairs are now required in the new married quarters at Talavera Park Estate, Aldershot.

Sir E. Errington: asked the Minister of Public Building and Works what are the causes of the bulging of certain floors in married quarters recently built at Talavera Park Estate, Aldershot; how they are going to be repaired; at what cost; what arrangements are to be made for temporarily displaced occupants; and for what period they will be displaced.

Mr. Sharples: One steel beam in each maisonette was not deep enough to resist a deflection of about ¼ in. Measures are in hand to strengthen the floors and make good the small movement in partition walls. Repairs will cost £78 for each of the 64 quarters completed and £25 for each of the 64 quarters under construction. The work will be finished about the end of May. It will take a few days for each quarter and occupants temporarily displaced will be accommodated in quarters completed but not yet occupied.
The cause of the trouble is clear without the need for a special inquiry.

Mr. Boyden: How much movement does the Parliamentary Secretary expect in the Aldershot buildings? As a set of very expensive buildings fell down last July and as these buildings have moved ¼ in., does not the hon. Gentleman think that there is some lack of supervision in his Department which allows this kind of building to go on undetected?

Mr. Sharples: No, Sir. The deflection here was only ¼ in. None the less, there was a mistake in the construction of these buildings, which I readily admit,

and I should like to apologise to the occupants for the inconvenience caused to them.

Mr. Lipton: Is not this but one of many examples showing how lax the control of Government expenditure is? When will the Government take steps to ensure that the unfortunate taxpayer gets value for money? It is not only these married quarters at Aldershot. No. 10, Downing Street and everything the Government are connected with is cracking up.

Mr. Sharples: No, Sir. I do not accept that. We in the Ministry of Public Building and Works are now doing building to the value of over £200 million a year, and the cost of putting right these married quarters is some £6,600.

10, Downing Street (Panelling)

Sir B. Janner: asked the Minister of Public Building and Works whether he is aware that much of the panelling on the walls of the recently rebuilt No. 10, Dawning Street would be disallowed under the new Draft Building Regulations referred to in Command Paper No. 2279; what proposals he has for the future of this panelling in the light of these regulations; and what changes he proposes to make in these draft Regulations to enable this panelling to be preserved.

Mr. Sharples: The panelling at No. 10, Downing Street is practically all original and Building Regulations drafted in accordance with the advice of the Building Regulations Advisory Committee would not apply.

Sir B. Janner: Will the hon. Gentleman look at the Building Regulations again? Is it not a fact that natural wood would have to be impregnated with certain chemicals that are so expensive as to make it absolutely impossible to use them at No. 10, Downing Street, or anywhere else? Does he not think that in the circumstances such a Regulation should never have been brought forward? Is he in a position to say that it will not be brought forward and made retrospective, so that at least No. 10, Downing street can be used in the very near future by another Government?

Mr. Sharples: No, Sir. The Regulations will not be made retrospective. I understand that natural wood can be treated to make it flame resistant. The cost is very little more than painting.

Sir B. Janner: Will the hon. Gentleman be good enough to make a statement at some time about what the cost of complying with those Regulations is likely to be? In answer to a previous Question the hon. Gentleman said that the Regulations are about to be revised. When are we likely to have a revised set of Regulations?

Mr. Sharples: The Building Regulations are being drafted at present, but in any case they would not apply to old panelling put back into a building which has been restored.

Mr. Wingfield Digby: Will my hon. Friend ensure that the Regulations encourage the use of home-grown timber, both for panelling and other purposes, rather than discourage it?

Mr. Sharples: Although I certainly support the sentiment lying behind my hon. Friend's supplementary question, it is rather wider than the panelling of No. 10, Downing Street.

Building and Civil Engineering Procedure in Scotland (Working Party's Report)

Mr. Small: asked the Minister of Public Building and Works what action he has taken to implement the recommendations of the Report of the Working Party on Building and Civil Engineering Procedure in Scotland to stimulate increased Scottish production of building materials and components.

Mr. Sharples: My right hon. Friend hopes to be in a position shortly to make a statement about the Report and its implementation.

Mr. Small: Will the Government examine the possibility of using local stone and other local materials, since architects and designers would welcome a change from the industrialised concrete world in which they seem to be working?

Mr. Sharples: Yes, Sir. My right hon. Friend will certainly take the hon. Gentleman's point into account.

Mr. Millan: asked the Minister of Public Building and Works what action he has taken to implement the recommendations of the Working Party on Building and Civil Engineering Procedure in Scotland on conditions of contract for building work in Scotland.

Mr. Ross: asked the Minister of Public Building and Works what progress has been made in implementing the recommendations of the Working Party on Building and Civil Engineering Procedure in Scotland in respect of contractual practices in the industry.

Mr. Sharples: On conditions of contract in Scotland, the Royal Incorporation of Architects in Scotland has set up a committee to revise the existing Scottish general conditions of contract. The committee has already met once and is dealing with this as a matter of urgency. On the recommendations of the Working Party generally, my right hon. Friend has invited comments from the organisations and bodies concerned.

Mr. Millan: On the question of contractual practices, are Government Departments to take any steps to initiate the all-trades form of contracting instead of the present separate trade contracting which is prevalent in Scotland?

Mr. Sharples: We have the recommendations of the Working Party under consideration and I think that I would rather leave further comments on this matter until my right hon. Friend has made his broader statement.

National Building Agency (Scotland)

Mr. Lawson: asked the Minister of Public Building and Works what progress has been made with establishing in Scotland the National Building Agency.

Mr. Sharples: The Chairman informs me that the Agency intends to commence operations in Scotland as soon as possible. Both he and the Deputy Chairman have been to Scotland. Negotiations are in progress for the acquisition of a suitable office in Edinburgh; and the Agency hopes to staff and open this office by June this year.

Mr. Lawson: Would the Parliamentary Secretary bear in mind that his right hon. Friend has a reputation for hustle and


bustle and that we would have expected something more than this to have been done by now? Since the date has been given, will he remember that we have hopes for great things from this Agency which is to be established in Scotland and that we will watch its development with great interest?

Mr. Sharples: We hope so too, but I do not think that June is too bad.

Mr. W. Hamilton: Will the hon. Gentleman reconsider the question of the siting of the office? Is he not aware that the Government's policy of dispersal is running counter to the suggestion that these things should be sited always either in Edinburgh or Glasgow, and is it not reasonable to suggest that this office should be sited in a smaller town, perhaps further north in Scotland?

Mr. Sharples: The question of siting is a matter for the Agency itself. The Agency must work closely with the Scottish Development Department and with my Ministry's Scottish headquarters and it must also be readily accessible to local authorities, professional institutions and building trade bodies. It was for that reason that the Agency decided that the best place for it to be sited was Edinburgh.

Painting, Royal Gallery (Restoration)

Sir B. Stross: asked the Minister of Public Building and Works whether he is aware that during the cleaning of the fresco painting of the Death of Nelson in the Royal Gallery, a small area of damage attributed to shrapnel during an air raid in the 1914–18 war has been repaired; whether he was consulted before the repair was made; and whether he will have the scar made by the shrapnel replaced.

Sir J. Duncan: asked the Minister of Public Building and Works whether he will replace the scar on the sailor's knee in the painting in the Royal Gallery of the Death of Nelson, removed through ignorance during the painting's recent cleaning.

Mr. Rippon: I am aware that this small damaged area was repaired while the painting was cleaned. The aim has been to restore the painting as nearly as

possible to the condition in which the artist painted it. In all the circumstances I do not think it would be right to restore the scar.

Sir B. Stross: Is the right hon. Gentleman aware how disappointing his Answer will be to the school children of Britain as well as to hon. Members who take children from their constituencies around and show them the difference between the tiny amount of damage done in the First World War and the Churchill Arch, which signifies what happened to this Chamber in the Second World War? Will he not kindly reconsider the decision he has now given and allow either myself or another hon. Member to put the damage right?

Mr. Rippon: I have some sympathy with that point of view, but I do not think that hon. Members on either side of the House are short of patter on these or other occasions. My difficulty in this instance concerns the restoration or rather, the de-restoration of a painting which it took the artist seven years to complete.

Mr. C. Pannell: Was the scar not a scar at all? Was it not the situation that during the war it was kept alive by the assiduous use of an occasional touching up with chalk?

Mr. Rippon: That may well be true.

Combined Courts Building, Croydon

Sir R. Thompson: asked the Minister of Public Building and Works when he will announce his decision on the proposal of Croydon Borough Council to enter into a joint scheme with his Department for the provision of a combined courts building in Croydon.

Mr. Rippon: I cannot say at this stage when I shall be able to announce my decision. Discussions are proceeding but there are several matters on which we have not yet been able to reach agreement with the Council.

Sir R. Thompson: Will my right hon. Friend reflect that a solution which results in a combined court building for Croydon will be very much in his interests, that it will lead to economies in the long run and that it is necessary that he should move quickly in this matter


in view of the urgent need that exists for this building and the fact that the Council has a first-class site available?

Mr. Rippon: I agree with my hon. Friend. It is a good solution, provided the terms are satisfactory. Representatives of my Ministry and the Home Office are having a further meeting with representatives of the Council this week.

Sir R. Thompson: Will my right hon. Friend reflect that the other two Departments mainly concerned, the Home Office and the Lord Chancellor's Department, are thoroughly in favour of this plan and are pressing hard for its implementation? Will he take that into account?

Mr. Rippon: We are all in favour of the principle, but we are not agreed on the terms.

Ancient Monuments and Historic Buildings (Guide Books and Postcards)

Sir L. Thomas: asked the Minister of Public Building and Works what progress has been made towards increasing the sales of guide books and postcards at the ancient monuments and historic buildings in his care.

Mr. Rippon: Between 1959 and 1963 receipts for sales at ancient monuments and historic buildings in my care rose from some £65,000 to about £150,000, an increase of 130 per cent.

Sir L. Thomas: I thank my right hon. Friend for that Answer. Do the improvements reflect an increase in the number of visitors actually visiting the monuments and historic buildings and, if so, how big is the increase?

Mr. Rippon: Yes, sir. The improvement is partly due to an increase of admissions, which rose between 1959 and 1963 from 6½ million to over 7½ million. It is also due to the fact that the range of guides and, I think, their standard, has been rising steadily.

Mr. Lipton: Would not sales be substantially increased if No. 10, Downing Street were thrown open to the public? Would not more postcards and guide books then be sold relating to No. 10? After all, the Prime Minister is away

so often that it could easily be opened to the general public on two or three days a week.

Mr. Rippon: No, Sir.

Royal Navy Buildings, Plymouth and Devonport

Miss Vickers: asked the Minister of Public Building and Works what is the programme for rebuilding, repairs and maintenance for the Royal Marine Barracks, Stonehouse, Plymouth, H.M.S. "Drake", Devonport, H.M.S. "Thunderer", Plymouth, and the Royal Naval Hospital, Stonehouse, Plymouth; in which years it is contemplated that the work will be carried out; and what will be the total cost.

Mr. Sharples: The total cost of major rebuilding in progress at present or to be started at the four establishments during the years 1964 to 1966 is estimated at £2,240,000. Much of the work will be completed by the end of 1966. Maintenance and repair expenditure in the current financial year is estimated at a total of £195,000.
With permission I will circulate details of the programmes in the OFFICIAL REPORT.

Miss Vickers: Since H.M.S. "Drake" and the Royal Naval Hospital are very much in need of urgent modernisation, how does this programme compare with the programme originally provided by the Navy Works Department?

Mr. Sharples: The work we do is the work we are asked to do by the Navy Department, and certainly we intend to press on with this work as fast as we can. Perhaps my hon. Friend will look at the details which are to be circulated, which are quite extensive.

Mr. Hector Hughes: What steps are taken to invite estimates from the various shipyards to see that this valuable work is fairly distributed among the shipyards of Britain, including those of Aberdeen?

Mr. Sharples: This Question relates to expenditure on various establishments, not on ships—which, I think, the hon. and learned Gentleman has in mind.

Following are the details:


Establishment
Project
Total Estimate
Start Date
Completion Date




£




Royal Marine Barracks, Stonehouse, Plymouth.
Stage I Development: Modernisation of ablutions, Barrack Blocks and Officers/Sergeants Galleys
285,000
1962
1964



Stage II: New Junior Ratings Club, Sergeants Mess and M.T. Complex. Modernisation of Marines sleeping Accommodation and Officers Mess 
393,000
1964
1966



Stage III: Work to sick quarters, offices, stores and workshops, vehicular access and final demolitions
144,000
1965
1967



TOTAL
822,000




H.M.S "DRAKE", Devonport
Modernisation of Junior Ratings and W.R.N.S. sleeping accommodation. Rehousing Signal Training Centre and Hydrographic School
390,000
1964
1967



TOTAL
390,000




H.M.S. "THUNDERER", Plymouth.
Stage II Development: Officers Accommodation Block and Recreation Area
310,000
1962
1964



Stage III:






Officers Accommodation Block
337,000
1964
1966



Additional Classrooms
95,000
1963
1964



Electronics Laboratory
13,000
1964
1965



TOTAL
755,000




Royal Naval Hospital, Stonehouse, Plymouth.
Modernisation of Annexes, Wards and 2 Blocks for Nursing Sisters and Auxiliaries
105,000
1964
1965



Air Conditioning the Operating Theatre
35,000
1964
1965



Conversion for Physiotherapy and Rehabilitation Department
18,000
1964
1965



District Heating Scheme
115,000
1964
1966



TOTAL
273,000





GRAND TOTAL
2,240,000

REPAIR AND MAINTENANCE


Estimated expenditure, 1964–65
£


Royal Marine Barracks, Stonehouse
…
…
…
…
…
…
…
…
30,000


H.M.S. "DRAKE" Devonport
…
…
…
…
…
…
…
…
65,000


H.M.S "THUNDERER" Plymouth
…
…
…
…
…
…
…
…
40,000


Royal Naval Hospital,Stonehouse
…
…
…
…
…
…
…
…
60,000


TOTAL
…
…
…
…
…
…
…
…
195,000

Navy Works Department

Miss Vickers: asked the Minister of Public Building and Works how many men he took over from the Navy Works Department; how the rates of pay compare with those of the Navy Works Department; and how many men earn less than £11 per week.

Mr. Rippon: Altogether, 15,275 non-industrial and industrial staff, including

women and juveniles, were transferred to the Ministry from the Admiralty in April, 1963. They all retained their rates of pay on transfer. Of the total, 4,269 are locally engaged overseas and earnings figures for them are not available centrally. Of the 1,598 non-industrial and 9,408 industrial staff in the United Kingdom, 115 and 2,000, respectively, are now earning less than £11 a week.

Miss Vickers: Will my right hon. Friend look into the question of those earning less than £a week and say how their salaries compare with what they would earn in private industry for doing the same jobs?

Mr. Rippon: They are paid at Government rates, which in this case are reviewed twice a year in negotiation with the trade unions concerned.

Mr. C. Pannell: May I ask whether a wage claim is at present outstanding for these people, because I am sure that the figure will strike most hon. Members as being rather low?

Mr. Rippon: As I pointed out, a review of their rates is made every six months. I cannot say whether at the moment a particular claim is outstanding.

Trafalgar Square (Plane Trees)

Wing Commander Bullus: asked the Minister of Public Building and Works when he proposes to replant the plane trees in Trafalgar Square.

Mr. Rippon: On the advice of my Advisory Committee on Forestry, I have decided that the existing unhealthy trees need not be felled until the autumn and should then be replaced with semi-mature plane trees. The Civic Trust has successfully developed a new technique for transplanting semi-mature trees and I have gratefully accepted the Trust's offer to advise me on the replanting in the Square.

Wing Commander Bullus: In thanking my right hon. Friend for that reply, may I ask him to give an assurance that the present character of the Square will be retained? Can he also say what will be the height of the new trees?

Mr. Rippon: My Advisory Committee on Forestry will advise on the siting. The trees which we have ordered are all about 15 years old and about 19 ft. high.

Oral Answers to Questions — PENSIONS AND NATIONAL INSURANCE

Commonwealth Immigrants (National Assistance)

Miss Quennell: asked the Minister of Pensions and National Insurance how many immigrants admitted to the

United Kingdom under the Commonwealth Immigrants Act as dependent relatives have subsequently received National Assistance.

The Minister of Pensions and National Insurance (Mr. Richard Wood): I am afraid this information is not available.

Miss Quennell: In view of the large numbers of immigrants who have been admitted under this Section of the Act, and the conflicting reports on the numbers who subsequently receive National Assistance, is it not possible for my right hon. Friend to arrange for this information to be available?

Mr. Wood: I will see whether there in any way in which I can help my hon. Friend, but the position is that the National Assistance Act does not distinguish between people who have immigrated into this country and others; therefore, the records of the National Assistance Board do not cover this question.

National Assistance

Mr. Cole: asked the Minister of Pensions and National Insurance if, in order to make the benefits of National Assistance more attractive both to those who receive them and to others eligible to receive them, he will consider changing its description to National Welfare.

Mr. Wood: My hon. Friend's objective has my full support, but the officers of the National Assistance Board have built up a reputation for kindness and sympathy. I think it more important to preserve this than to change the name of the Board.

Mr. Cole: I thank my right hon. Friend for that Answer, but is he aware that, above all things, the work of the staff matters far more than the name? Would he give this further consideration, because, although Shakespeare had a few words to say about the value of names, the name is of great importance in regard to public services.

Mr. Wood: As my hon. Friend knows, this question has been given consideration from time to time and there has never been agreement as to what name would be better. My own opinion is that a change might well lose as much as it gained.

Mr. W. Hamilton: Would not a much better solution be to increase National Insurance benefits and so get rid of the Board altogether?

Mr. Wood: National Insurance benefits are all immensely higher in real value now than they were in 1951.

Sir K. Thompson: With the same object in mind, would not my right hon. Friend think it highly desirable to find some way of managing National Assistance payments so that those who receive them permanently and regularly may receive them with their ordinary National insurance benefits?

Mr. Wood: As my hon. Friend knows, the words "National Assistance" do not appear on the order books through which grants are paid at the Post Office.

Constant Attendance Allowance

Miss Herbison: asked the Minister of Pensions and National Insurance what considerations are taken into account when deciding the amount of constant attendance allowance to be paid to an individual.

Mr. Wood: Subject to maxima laid down by the Industrial Injuries Act and Royal Warrant, the amount of constant attendance allowance under the Industrial Injuries and War Pensions Schemes is determined by the extent and nature of the help pensioners require because of their pensionable disability in order to look after their personal needs like dressing and eating.

Miss Herbison: Is the right hon. Gentleman aware that there is at present some dissatisfaction in some individual instances at the rate of constant attendance allowance paid? If I send to him details of one case, in which a daughter who has had to give up her work to look after her father full-time has been given 37s. 6d. a week, will he look into it for me?

Mr. Wood: I will certainly look into the case mentioned by the hon. Lady.

Pneumoconiosis, Chronic Bronchitis and Emphysema

Miss Lee: asked the Minister of Pensions and National Insurance whether he will introduce amending

legislation to enable any mineworker suffering from pneumoconiosis, chronic bronchitis or emphysema to claim full insurance benefit if he has worked for five years or more underground, even though doubt may exist as to whether his condition arises directly from his work in tae mines.

Mr. Wood: No, Sir. I assume the hon. Lady has in mind the higher rates of benefit under the Industrial Injuries scheme. To justify the preferential benefits of that scheme it is essential for the connection between a person's work and his injury or disease to be clearly established. This is not so with bronchitis and emphysema, which are common complaints among all sections of the community; but with pneumoconiosis the position is quite different, because its connection with the conditions of employment has been clearly established. Where a miner is found to have the disease, it is assumed to have been caused by his occupation providing he has worked in the mines for over two years.

Miss Lee: Is the Minister aware that there are some heart-breaking cases in which there is disputed medical evidence? If the bringing of all men suffering from those complaints up to the highest possible payment level cannot be covered by the present insurance provisions, surely a compassionate Government ought to find some other way of ensuring that the end result is achieved; that no man who has been working underground and is suffering from any of those diseases should be deprived of maximum benefit.

Mr. Wood: The Government are bound by Section 55(2) of the 1946 Act which, as the hon. Lady knows, requires a disease to be a risk of the occupation and not a risk common to all persons. The incidence of bronchitis and emphysema is common not just among miners.

Sir B. Stross: Would the Minister bear in mind, however, that workers in the cotton industry who inhale dust from cotton and sustain a disease called byssinosis—which is asthma, with bronchitis and bronchial spasms—after 10 years' work qualify for Industrial Injury benefit. Would he not agree that my hon. Friend the Member for Cannock (Miss Lee) is right in asking for a similar 10 years' grace, so that men who enter


fit into the mining industry and later suffer from pulmonary disability, bronchitis, bronchial spasm, emphysema and shortness of breath generally, should be classed as suffering from industrial disease?

Mr. Wood: Many of the issues mentioned by the bon. Lady obviously arise in the cases mentioned by the hon. Member for Stoke-on-Trent, Central (Sir B. Stross). If the hon. Gentleman likes to put down a specific question on the subject, I will do my best to answer it.

Mr. Dalyell: The Minister says that chronic bronchitis is to be found among all sections of the community, but is he aware of the high correlation between chronic bronchitis and employment in the mining industry?

Mr. Wood: It is true, as the hon. Member says, that the incidence of bronchitis tends to be higher among miners, but it tends to be higher still among miners' wives. That is one of the things that makes the problem very difficult to deal with.

Miss Herbison: But is not the Minister aware that for many years now there has been agitation to have not only pneumoconiosis scheduled as an industrial disease but to have general chest disabilities so scheduled? Will the Minister at least promise to have this whole matter investigated again, because great hardship is certainly caused in the mining industry, and in the steel industry, with things as they are at present?

Mr. Wood: I am always ready to consider any evidence brought forward about this matter, but while it is certainly true that bronchitis is more common among some groups than others—for instance, it is more common among smokers than among non-smokers, and more common in towns than in the country—it has not yet been established that it is an occupational disease of miners.

Family Allowances

Dame Irene Ward: asked the Minister of Pensions and National Insurance whether he will set up an official inquiry into the position of married persons with large families, with a view to ascertaining whether family allowances are sufficient to provide requisite standards of nutrition.

Mr. Wood: No, Sir. Family allowances are a general supplement to family income, but they have never been intended to cover the full cost of maintaining a child.

Dame Irene Ward: Has my right hon. Friend read the recent book on nutrition in Britain, which seems to indicate that children in large families are somewhat undernourished? When a book of that kind appears, would it not be a good idea, in the interests of the community as a whole, for my right hon. Friend not, perhaps, to be quite so dogmatic, but really to find out what the facts are, and whether these statements are correct, so that we can take appropriate action?

Mr. Wood: I have seen this pamphlet. One of the interesting parts of it is that this disparity in nutrition between the small families and the larger families is not correlated very closely to income. The disparity is true of both the families with higher incomes and those with lower incomes. In any event, my hon. Friend will be aware that the welfare services—school meals, school milk and so on—are intended as much as family allowances to deal with the problem.

Dame Irene Ward: Would my right hon. Friend bear in mind that I had to put the Question in this form in order to get it to him? Is it not possible that the whole situation requires looking at, or does not my right hon. Friend agree at all with the facts that are brought forward?

Mr. Wood: I realise that this pamphlet—and, indeed, the National Food Survey—has made clear that the larger families tend to be less well-nourished than the smaller families, but this is common to families in all income groups. I will certainly bear in mind what my hon. Friend says.

Oral Answers to Questions — HOSPITALS

Tavistock Clinic

Mr. Albu: asked the Minister of Health when the final costings of the new building for the Tavistock clinic were received in his Department for approval; and why approval has not yet been given.

The Joint Parliamentary Secretary to the Ministry of Health (Mr. Bernard Braine): August last: approval has been given.

Mr. Albu: Why was there this considerable delay? After all, it is an agreed scheme.

Mr. Braine: A number of important matters had to be settled by discussion before technical and financial approval could be given; for example, parts of the new premises are to be occupied by a non National Health Service occupant

Oral Answers to Questions — HOUSE OF COMMONS CATERING

Mr. Rankin: asked the hon. Member for Holland-with-Boston, as Chairman of the Kitchen Committee, whether food grown at factory farms is supplied in any of the catering departments of the House for which his Committee is responsible.

Sir H. Butcher: I am sorry that it is not possible to give the hon. Member the information for which he asks. When purchasing supplies, the Refreshment Department carefully considers availability, quality and price, and purchases are made from reputable wholesalers who have, in most cases, supplied the Department for many years.

Mr. Rankin: In view of the importance of this subject, am I to understand that the Kitchen Committee buys for consumption in this building food about the origin of which it has no knowledge whatever? Does the hon. Gentleman think that this is a proper method of conducting his business? Will he assure the House now that he will make some attempt to ascertain the sources of the food for which he is responsible to this House?

Sir H. Butcher: I think that, if we continue to follow the custom of dealing with reputable wholesalers, the health services of this country will be able to function without assistance from the Kitchen Committee.

Mr. Rankin: Is it quite outwith the range of the hon. Gentleman's responsibilities to ascertain from the wholesalers who supply him and, through him, the

House whence comes the food which he is purchasing?

Sir H. Butcher: It would serve very little purpose if the names and addresses of the producers were made known to the Refreshment Department, which has to rely on purchasing on quality and price, assisted by the skilled buyers serving the Department, and dealing with wholesalers who have served us for a very long time.

Mr. Gibson-Watt: Will my hon. Friend please find out from the hon. Member for Glasgow, Govan (Mr. Rankin) exactly what is meant by—

Mr. Speaker: Order. It is not for the Chairman of the Kitchen Committee to make inquiries of the hon. Gentleman.

Mr. Rankin: But, Mr. Speaker, is the House to assume—

Mr. Speaker: I do not know what the hon. Gentleman is doing. Is he rising to some point of order?

Mr. Rankin: I am sorry, Mr. Speaker. I thought that you called me.

Mr. Speaker: No

Oral Answers to Questions — MINISTRY OF HEALTH

General Practitioners, St. Helens

Mr. Spriggs: asked the Minister of Health what is the doctor-patient ratio in the County Borough of St. Helens, Lancashire; if he is satisfied that the present number of general practitioners there adequately provides the medical care required; and if he will make a statement.

Mr. Braine: The general practitioners living in St. Helens have average National Health Service lists of about 2,650. The area is designated by the Medical Practices Committee as being in need of more doctors.

Mr. Spriggs: What is the hon. Gentleman's Department doing about getting more doctors so that proper medical care can be given to patients in St. Helens? Has he considered developing team practices to overcome the difficulties which doctors, with lists of 3,000 or 3,500 patients are having to face?


How can doctors give proper medical care when they have all these patients on their lists?

Mr. Braine: I fully accept that the figure of 2,650 which I have just given is high. The situation is improving slightly, the average list having fallen by about 125 over the last two years. But I must say that there is no easy way of solving the problem of shortage in St. Helens. We shall need more doctors, and the House will be aware of the steps being taken to increase the output of medical schools.

Mr. Spriggs: How many doctors in St. Helens have lists of 3,000 and more?

Mr. Braine: About 19, I think.

Speech Therapy and Chiropody (Teachers' Salaries)

Mr. Albu: asked the Minister of Health what steps he is taking to ensure that the salaries of teachers in speech therapy and chiropody employed in the National Health Service are equivalent to those employed by local authorities.

Mr. Braine: None, Sir.

Mr. Albu: Does the hon. Gentleman think it reasonable that, in one case, the salary of teachers is 60 per cent. of that in the education service and, in the other case, it is half that in the education service, very often for better qualified teachers in the National Health Service than in the education service? How does the hon. Gentleman think that it will be possible to maintain teaching institutions of this kind in the National Health Service when salary differences are as great as they are?

Mr. Braine: As the hon. Gentleman may know, the salaries of teachers of chiropody in the National Health Service chiropody schools are, in the first instance, a matter for the appropriate Whitley Council. I understand that the Industrial Court will shortly hear the case for improving the salaries in both the clinical and teaching grades which the two sides of the Council were unable to resolve. In view of what the hon. Gentleman has said, he may like to know that my right hon. Friend has recently agreed to a revision of the

salaries, which are not negotiated in the Whitley Council, of the principal and deputy principal of the only speech therapy school in the hospital service—the hon. Gentleman may have this in mind—in the light of changes in the salaries for similar posts at schools for allied professions which are negotiated by the appropriate Whitley Council.

Mr. K. Robinson: Is the hon. Gentleman aware that these are not by any means the only two categories of staff in respect of whom there is this salary differential between the National Health Service and the local authorities, always to the detriment of the Health Service? How does he think that we shall ever get staffs within the Health Service up to a reasonable level if local authorities are always able to pay more? Is it not time that a general review were made of these categories of staff common to both services in an effort to arrive at a common level of salary?

Mr. Braine: If the hon. Gentleman is talking about teachers of chiropody in the National Health Service—that is what the Question refers to—

Mr. Robinson: I said that there were others.

Mr. Braine: —I have explained exactly what steps we are taking to remedy the situation. If the hon. Gentleman is referring to other categories, perhaps he will put a Question down.

Mr. Albu: Is the hon. Gentleman aware that even after the salary increase which is going to the principal and deputy principal of the school of speech therapy, their salaries will be very little more than half the salary which they would get in the education service?

Mr. Braine: I should like to await the decision. It is quite impossible to form a judgment of that kind at this moment.

Prescription Charges

Mr. Spriggs: asked the Minister of Health what representations he has received, up to the latest convenient date, about the need to abolish prescription charges; and what action he proposes to take to do this.

The Minister of Health (Mr. Anthony Barber)): During 1963, such representations were received from five organisations and 48 individuals. I remain of the view that the net sum yielded after hardship cases have been met is better devoted to the development of the Service than to the abolitions of the charges.

Mr. Spriggs: Does the right hon. Gentleman realise that there are many thousands of people who do not qualify for National Assistance and who, therefore, cannot get relief for the prescription charge under National Assistance, and that this is causing real hardship? Will the Minister do something about it, or make way for a Government who will?

Mr. Barber: As the hon. Gentleman knows very well, where payment of prescription charges causes financial hardship help can be obtained through the National Assistance Board. I am always ready to look into any individual case. As the hon. Gentleman refers to the possibility of another Government, he will bear in mind that the abolition of all health charges would cost about £50 million a year? This would mean one of three things, that expenditure on the Health Service would be cut by that amount, that there would be £50 million less for some other public service, or that taxation would be increased by that amount. I should have thought that the Opposition might at least do the electorate the courtesy of letting them know which course they would adopt.

Mr. K. Robinson: Does the Minister realise that the smallness of the number of representations is almost certainly due to the fact that people are fed up with protesting to this Government about prescription charges and are now content to await a change of Government in October? In response to his implied question to me, may I ask the right hon. Gentleman whether he is aware that the next Labour Government will abolish prescription charges without making cuts anywhere else in the National Health Service to make up for the costs of their abolition?

Mr. Barber: At the beginning of the last Labour Government, we heard a great deal about what was going to

happen to the National Health Service. What did happen was that, in the last Budget of the Labour Government, there was a cut in the social services, which the right hon. Gentleman the Leader of the Opposition said in his resignation speech was quite unnecessary.

Mr. Dudley Williams: If the figures are available, will my right hon. Friend tell the House what charge would fall on the Exchequer if the charges for spectacles and teeth introduced by the Labour Government were also abolished?

Mr. Barber: I do not have the individual figures with me.

Mr. G. Thomas: Is the Minister aware that a large number of people on small fixed incomes do not come within the category of those who can be helped by the National Assistance Board, which is ruled very strictly by regulations? People in t its category are very seriously hit by heavy prescription charges in their old age. Will the right hon. Gentleman look into that matter?

Mr. Barber: I hope that the hon. Gentleman will let me have details of particular cases. If he does, I will be very happy, to look into them. As he knows, or as I assume he knows, the National Assistance Board can help people other than those who are in regular receipt of National Assistance.

1961 Census (Water Systems)

Mr. Frank Allaun: asked the Minister of Health if he is aware of mistakes made in the 1961 census just published which seriously understates the number of houses without a bath, hot water system or inside water closet in Manchester and other cities; and if he will take action to have the figures corrected.

Mr. Braine: There is no evidence of any significant errors in the number of dwellings and households lacking bath or hot water tap. Misunderstanding of the census question on water closets led to an understatement of the numbers of dwellings and households lacking a water closet in the building or attached to it. It is not proposed to publish volumes of corrected tables.

Mr. Allaun: Is the Parliamentary Secretary aware that in Manchester, for instance, the figure shown of houses without lavatories inside or attached to them is 1·2 per cent., whereas the proportion is over 25 per cent.? The figure in Liverpool is shown as 2·2 per cent. These are ridiculous figures which grossly understate the seriousness of the problem. Will the Minister consider having a special supplementary report made to correct this?

Mr. Braine: These errors—and they were errors—will be discussed in the housing report of the 1961 census. There is insufficient information available to make corrections to the published figures. Even if the information were available, it would be a difficult and costly operation to correct all the many thousands of separate figures which have already been published in the county volumes.

Cancer Research

Mr. Brockway: asked the Minister of Health what monetary contribution the United Kingdom will make to the establishment of the World Research Agency for Cancer.

Mr. Barber: Discussions with the other countries concerned have not yet made sufficient progress to make it possible to say what monetary contribution the United Kingdom will make.

Mr. Brockway: Can the Minister assure the House that there will be an adequate contribution from our Government to this very commendable purpose, which would relieve very great suffering? Secondly, can the right hon. Gentleman say whether there is any discussion of incorporating a research centre on cancer with the proposed world research centre? Is it not very desirable that the two should be associated so that the most effective contribution can be made?

Mr. Barber: On the latter point, I will bear in mind what the hon. Member says. We are still considering the technical and constitutional aspects of the proposal. The financial implications are also under consideration, but agreement has not yet been reached. The House may be interested to know that the kind of arrangement which is being

considered would involve the basic contribution by each country which decides to take part supplemented by voluntary contributions in cash or kind for special projects.

Drugs

Mr. K. Robinson: asked the Minister of Health if he is aware that the London Executive Council recently removed from the surgery of a deceased general practitioner 598 drug samples, including several samples of the same drugs; and if he will bear in mind, in negotiating the renewal of the voluntary price regulation agreement with the pharmaceutical industry, the element of cost inflation resulting from the excessive supply of free samples to doctors.

Mr. Barber: Sales promotion costs, including samples, is one of many matters to be considered during the negotiations.

Mr. Robinson: Will not the Minister agree that this sort of thing is carrying sales promotion a little far, particularly since many of these samples were of the same drug supplied to the same doctor again and again? Does not the right hon. Gentleman agree that this must lead to a distinct inflation of drug costs?

Mr. Barber: Unfortunately, I do not have details of this particular incident, so I do not know over what period the samples were accumulated. But it seems to me that the supply of samples, which is a recognised form of bringing drugs to the attention of doctors, is sensible. I hope that the hon. Member will bear in mind that the code of sales promotion practice for medical specialities in the United Kingdom issued by the Association of the British Pharmaceutical Industry makes it clear that requests from doctors to be removed from mailing lists must be honoured. If this doctor did not want to receive the samples, all he had to do was to say so.

National Health Service Dispensing (Chemists' Remuneration)

Lord Balniel: asked the Minister of Health what is the present state of negotiations about the remuneration of chemists in England and Wales for their National Health Service dispensing.

Mr. Barber: It was agreed in 1962 that an inquiry should be carried out by a


firm of consultants into the expenses of National Health Service dispensing by chemists, other than the cost of drugs and containers, which is reimbursed separately and in full. Their final report was received in January. Since then I have met the chemists' representatives, and discussed the matter with them.
Remuneration for National Health Service dispensing is intended to cover two elements—firstly, chemists' actual outgoings and, secondly, their net earnings. The House will be pleased to know that as regards the outgoings, I have informed the chemists' representatives that, subject to certain minor aspects which are still under discussion, I accept the figures of actual outgoings revealed by the report. I estimate that this will involve an addition to total remuneration of at least £3 million a year, or an increase in the average payment to chemists of at least £230 a year
The second element which is taken into account in determining chemists' remunertaion is their net earnings. The object here is to ensure that they receive a fair reward for the service they provide. An increase in this element is, in my view, also justifiable. The actual amount is for negotiation.

Lord Balniel: The average increase in payment to cover expenses of at least £230 a year will be very warmly welcomed by the chemists, many of whom are rather worried by existing trading conditions. May I ask the right hon. Gentleman two questions? First, will he push forward the outstanding negotiations so as to reach a settlement as soon as possible? Secondly, would he agree that the right principle is that chemists should be properly paid for dispensing so that they do not have to subsidise their dispensing by profits on the sale of non-pharmaceutical products?

Mr. Barber: On the first point, I certainly want to proceed with all possible speed. Indeed, I suggested to the chemists that they should present to me a specific claim for increased remuneration for the very purpose of trying to get things going more quickly. I received that claim last month.
On the second point, our object has always been, and remains, to fix remuneration, including profit, at such a

level as to give a fair return to the chemists for the service which they provide, regardless of the profit earned on the retail side.

Mr. K. Robinson: Is the Minister aware that we on this side of the House are very glad that some progress has been made towards resolving a matter which has been causing considerable concern among chemists? Will he bear in mind in the course of his negotiations that all the evidence points to the fact that under the existing arrangements the greatest hardship is suffered by the smaller chemists, particularly the one-man businesses, and that probably some further weighting in their favour is necessary if justice is to be done?

Mr. Barber: I am sure that the hon. Member would not expect me to say more than that I will bear that in mind. I have no doubt that it will be one of the points which we shall be considering with the chemists' representatives.

Sir H. Linstead: I thank my right hon. Friend for his statement. May I put one question to him? He has spoken about the payment of the expenses element in remuneration. Those expenses having been paid already by the people concerned, can my right hon. Friend indicate whether any element of retrospection is possible in regard to that section of the remuneration?

Mr. Barber: I think that we have to see how the negotiations go, but certainly I would not rule out a measure of retrospect in so far as chemists' outgoings are concerned.

Mr. Grimond: Can the Minister say whether these figures take into account the loss which the chemists allege they will suffer if the abolition of resale price maintenance goes through?

Mr. Barber: As I have explained, our object is to fix the remuneration so as to give chemists a fair return for the service which they provide regardless of the profit earned on the retail side. If chemists' non-National Health Service business were reduced for any reason, there would probably be some increase in the proportion of expenses allocated to National Health Service business. In that event, that would ultimately have a small effect on National Health Service


remuneration. But I would not wish the House to be misled about this. It would not, in fact, be very great.

INDUSTRIAL TRAINING BOARDS

The following Question stood upon the Order Paper:

Mr. GIBSON-WATT: To ask the Minister of Labour whether he will make a statement about progress in implementing the Industrial Training Act.

The Minister of Labour (Mr. J. B. Godber): I have already announced that Mr. Norman Longley has accepted the chairmanship of the Construction Training Board. I can now add to that the names of the chairmen of three more of the Industrial Training Boards which I intend to set up as soon as possible.
Mr. Arnold Lindley, Chairman of the General Electric Company Limited, has agreed to become Chairman of the Engineering Training Board, Mr. Peter M. Shepherd, Chairman of Shepherd Holdings Limited, to be Chairman of the Wool Textile Training Board and Mr. Charles T. H. Williams, Chairman of the Park Gate Iron and Steel Company Limited, to be Chairman of the Iron and Steel Training Board.
I am sure that the House will agree that I have been very fortunate in securing the services of these leading industrialists for these posts, which will be of vital importance to the improvement of training in British industry.
Discussions are taking place with those concerned about the scope and membership of these four boards.
A Guide to the Act has now been printed and copies have been placed in the Library and in the Vote Office. Copies have been sent to all the main employers' organisations and trade unions, as well as to other interested bodies. Further copies of the Guide can be obtained, free of charge, from any regional or local office of my Ministry.
As I informed the House on 16th March, Sir John Hunter has agreed to be Chairman of the Central Training Council and I hope to announce the names of the other members shortly.

Mr. Gibson-Watt: In congratulating my right hon. Friend on an encouraging statement on a matter of great importance to industry in general, may I ask when he thinks that these boards will be set up and when they will be working?

Mr. Godber: I attach particular importance to getting these four boards going as soon as possible. I very much hope that we shall be able to get them set up in the early part of the summer.

Mr. Gunter: The Minister has drawn attention to the fact that it was on 16th March that the appointment of the Chairman of the Central Training Council was announced. Five weeks have passed. The right hon. Gentleman now says that we will know the other names shortly. Can he be a little more specific?

Mr. Godber: This has entailed a good deal of consultation. A considerable number of people are concerned and, naturally, it is not always possible to get the first choice. However, I have had an agreeable response and I hope that I will be able to announce the other names very soon.

Mr. Dudley Smith: Is my right hon. Friend satisfied with the response so far shown by industry towards the Act's proposals?

Mr. Godber: Yes, Sir. It is early days yet and it will take some time to get these various boards into operation. My main interest at the moment is to see that industry carries on with its existing plans for training during the interim period. Generally speaking, however, industry is showing a very satisfactory interest in the proposals and I hope that we get off to a good start.

Mr. Albu: What steps has the Minister taken to strengthen the specialist staff in his Department in view of the obvious need for such staff?

Mr. Godber: We have considerably increased the staff in my Department since we started on this objective. What we want to do is to get the boards started on their own and we are giving them all the assistance we can. If I think that there is need for any more staff, I shall not hesitate to ask for them.

LAOS

Mr. Gordon Walker: (by Private Notice) asked the Secretary of State for Foreign Affairs what measures he has taken in regard to the coup d'etat in Laos and whether British lives have been lost or are in danger.

The Secretary of State for Foreign Affairs (Mr. R. A. Butler): The House will be glad to hear of a report this morning from Her Majesty's Chargé d'Affaires in Laos that Prince Souvanna Phouma, Prime Minister of the Government of National Union, left about 12 hours ago together with General Phoumi and the revolutionary leaders to see the King of Laos at Luang Prabang. I understand that the purpose of their mission is to reconstitute the Government of the National Union under the leadership of Prince Souvanna Phouma.
This encouraging development holds out some hope that the political crisis in Laos may be resolved by the Laotian leaders themselves. Meanwhile, I had, before the revolt in Vientiane took place, and as soon as I heard of the possibility of Prince Souvanna Phouma's resignation, sent him a personal message of support and encouragement.
Her Majesty's Chargé d'Affaires in Laos, who has throughout displayed great energy and ability in these difficult circumstances, has also made clear to all concerned, on my instructions, that I regarded the reported seizure of power by the revolutionary Committee as contrary to the spirit of the Geneva Agreement.
As far as I know, no British subjects have been injured or seriously endangered.

Mr. Gordon Walker: As it is obviously difficult to get exact news, will the Foreign Secretary keep us in touch if there are any further developments? Is he aware that his account is much more satisfactory than the position appeared to be yesterday? Is he aware that it is important to keep stability in this dangerous part of the world and that we, this country, because it is co-Chairman with Russia of the Geneva Conference, have an important part to play? Will the right hon. Gentleman keep in close touch with both the United

States and the Soviet Union on this matter, which is of great importance?

Mr. Butler: Yes, Sir. In response to the latter part of the question, we have been in touch with the Soviet Ambassador in Laos and I have sent a message to Mr. Gromyko as co-Chairman. We shall certainly keep in close contact with the Soviet Government. As to keeping the House informed, if things develop normally I do not think that that will be necessary, but I will keep in touch with the right hon. Gentleman so that we may watch events.
We fully realise our own responsibilities. In my present office, I am co-Chairman with the Soviet Foreign Minister. We shall continue to watch the situation. I should like to add that I have just received a further telegram confirming that all British subjects are safe and accounted for.

Mr. Brockway: Whilst welcoming the news which the right hon. Gentleman has given, may I ask whether he would not agree that the position in Laos is unstable almost from month to month and that one of the difficulties is that the negotiations broke down because the capital should be more neutral concerning the presence of troops? Could not something be done to change the situation in the capital, Vientiane, where the garrison and the security forces are dominated by the Right-wing royalists? If the Government is to be stable, must not there be some change in that situation?

Mr. Butler: We cannot completely control the situation, but in so far as my fellow co-Chairman, the Soviet Foreign Minister, and I, can do so, we shall do our best to influence it in the direction desired by the hon. Member.

Mr. Warbey: Can the right hon. Gentleman confirm reports that in accordance with the aims of the revolutionary military leaders, the reconstituted Government is to be a bipartite one, excluding the Left-wing forces, and not a tripartite one as provided by the Geneva Agreement of 1962? In that case, would not the right hon. Gentleman agree that it would be also a violation of the spirit of that Agreement and that it might lead to disturbing developments in the whole area?

Mr. Butler: Yes, Sir. We certainly hope that the Government will be reconstituted on the lines suggested in the Geneva Agreement. But I have no further news on this subject to give the House this afternoon.

SOUTHERN RHODESIA

Mr. G. M. Thomson: (by Private Notice) asked the Secretary of State for Commonwealth Relations what steps he is taking to secure the safety of the staff and the property of the United Kingdom High Commission in Southern Rhodesia in view of the disturbances which have taken place outside it.

The Secretary of State for Commonwealth Relations and for the Colonies (Mr. Duncan Sandys): The demonstration referred to did not involve any danger to the staff and property of the British High Commission.

Mr. Thomson: Is it not very unsatisfactory that some hundreds of Africans, including more than 100 African women, should be arrested for protesting about policies with which, presumably, Her Majesty's Government disagree in principle?
Would not the Minister agree that the best way to protect British life and property in Southern Rhodesia, to say nothing of the British reputation in the world at large, would be to make strong representations to the new Prime Minister of Southern Rhodesia that the best way to safeguard the future of the European community there is to get Mr. Joshua Nkomo and the Nationalist leaders of Southern Rhodesia round the table instead of throwing them into gaol?

Mr. Sandys: The question of arrests is, of course, not the responsibility of Her Majesty's Government in the United Kingdom.
I feel, with regard to the second part of the hon. Member's question, that he is perhaps trying to stretch his supplementary on his Private Notice Question, which was on an urgent and very limited issue, to cover wider issues of policy.

Mr. Bottomley: On the point that the Government have no responsibility, is

it not a fact that the Constitutional Council which the Secretary of State helped to establish did, in fact, express doubts whether the Preventive Detention Act was legal or not? In those circumstances ought not the Secretary of State to consider making some representations?

Mr. Sandys: Yes, the Constitutional Council is a part of the Constitution of Southern Rhodesia and should be allowed to work within that Constitution. It has certain powers of advice and certain delaying powers, which it will exercise, no doubt, as it thinks fit within the framework of the Constitution. It is not a matter for Her Majesty's Government in the United Kingdom. It would be quite improper for the Government to seek to intervene at an intermediate stage in the operation of the Southern Rhodesian Constitution.

Mr. Marsh: Would the right hon. Gentleman not agree that probably the position is made more difficult in Southern Rhodesia by the uncertainty about the future of Southern Rhodesia at the present time? Does he not think that it would assist if he were to make a quite unequivocal statement that in no circumstances would the Government tolerate a unilateral declaration of independence by the Southern Rhodesian Government?

Mr. Sandys: The Private Notice Question related to the safety of the staff and property of the British High Commission. I think that the hon. Member's question goes far beyond that.

Mr. Hastings: Would my right hon. Friend not agree that, whatever the future of Southern Rhodesia may be, very many people in this country will regret bitterly the brutal and deliberate provocation organised by a small group of nationalists in Salisbury over the weekend?

Mr. Sandys: I do not wish to make any comment on any aspect of this question in reply to the Private Notice Question, which was addressed to a specific and very limited issue.

Orders of the Day — WAYS AND MEANS

Considered in Committee [Progress, 16th April]

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

AMINDMENT OF THE LAW

Question again proposed,
That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description, or for all goods to which any of the several rates of tax at present applies.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION

3.42 p.m.

Mr. Douglas Houghton: The country has largely ignored the Budget and gone about its business. The Chancellor's statement on Tuesday was mostly sums and sermons, and the comment upon it has been flat, like the Budget itself. I read comments such as "Mr. Maudling's mouse", minimum dose", "dull", "lost opportunities" and I see, in a rather despondent leader in The Times this morning, that it is suggested that this mouse "has crept into its hole". I hope that we shall catch a glimpse of it now and again during the rest of our debate.
But there is no excuse for a dull Budget in these exciting times, least of all this year, when there is so much to be done. I do not remember any Budget which has had so little attention during the Budget debate. I do not remember any Chancellor who has so plainly lost has way that he has had to keep on asking my right hon. and hon. Friends for directions. "What would you do?" he has been continually asking. On television, he said that ideas would be welcome. On Thursday, the Financial Secretary said, "My right hon. Friend is all ears".
This is the condition of a Chancellor of the Exchequer at the end of his tether. This is the Budget of a Government resigned to defeat. It makes it all the more remarkable and reprehensible that they have decided to stay longer in office, when their initiative is exhausted and their authority gone. As the right hon. Gentleman the Leader of the Liberal Party said earlier in the debate, if the Government
stay in office, the only justification for their doing so is that they have a job to do."—[OFFICIAL REPORT, 15th April, 1964; Vol. 693, c. 476.]
There is no sign of it here—no imagination, no inspiration, no philosophy. This is a twilight Budget.
"But," say right hon. and hon. Members opposite, "the Chancellor will be remembered. He will be remembered for being right last year." In a moving passage, the Economic Secretary, on Thursday, striking the most optimistic note on the benches opposite in the whole of the debate, said:
But, despite the Job's comforters of the expert Press, events prove that my right hon. Friend was right last year, and I have equal confidence that he will be able to make the same claim from this Box next year."—OFFICIAL REPORT, 16th April, 1964; Vol. 693, c. 725.]
Before that becomes a political legend let us see how right the Chancellor really was last year. Events turned out better than the Chancellor's design. He was, in fact, lucky to be wrong. I spend a moment or two on this to save right hon. and hon. Members opposite from the sin of self-righteousness. What the Chancellor did last year was to cut taxes by £260 million, increase expenditure, or, rather, estimated expenditure, by £490 million, make provision to borrow up to £690 million, to balance the total Budget above and below the line, so that up to £900 million extra spending power could be released for consumption and for investment during 1963–64 to boost expansion without serious danger to our balance of payments and the strength of sterling. That was the Chancellor's judgment last year.
What actually happened? He underestimated revenue by £51 million; he over-estimated current expenditure by £112 million; so he borrowed £209 million less than he had provided for; his revenue was up, his expenditure was


down, and his borrowing provision was down. And yet, we are told, the economy is beginning to sweat under the strain and must be cooled down a little. Had that £112 million spending power been released as the Chancellor estimated that it safely could what sort of a stress would he have been under today? The Chancellor knows very well that the difficulties have been reduced not by his being right, but by his being wrong. How right will he prove to be this time? Frankly, I do not know. We can only share the Chancellor's own doubts. He is acknowledging that he is taking chances, and he is probably right to do so.
The immediate issues raised by the Budget are marginal. In financial terms the borrowing position is up by £100 million on last year, due in part to the new arrangements for local authority borrowing. In fiscal terms taxation is raised by £100 million. In view of these two marginal factors it surprises me how hon. Members opposite can be convinced and say that this is about right. I envy them their prescience and judgment on the situation. As a matter of fact, without raising taxation at all the Chancellor reckons on getting another £465 million in revenue this year, without putting a penny on anything. Against that he has an extra £571 million of Government spending to meet. On the face of it the gap of £110 million between the estimated rise in revenue without new taxes and the estimated increase in expenditure would not, by the Chancellor's standards of last year, require him to impose new taxes.
Last year, the Chancellor had a much bigger gap between estimated revenue and estimated expenditure. It was the difference between £314 million extra revenue and £488 million additional expenditure—a gap of £170 million. Did he increase taxation then? Did he even leave things alone? He reduced taxation by £260 million and made the gap wider, and he did it to boost the economy.
No one in his senses would suggest that what the Chancellor did last year should be repeated this year. But the Chancellor is, in fact, moving in the opposite direction. This year he tells us that we must not get rich too quickly and has cut the dividend by £100 million. Is this necessary? If so, has he chosen the

right way to do it? Why insist on additional taxation this year? I personally am unconvinced. If there were any point in arguing the matter at this late stage, I should be prepared to do so. But we are talking about little more than half of 1 per cent. of the tax bill. Yet some hon. Members have ventured the opinion that this is about right. I venture the opinion that it is about wrong, and I leave it there. After all, the Chancellor's judgment is the one that counts, and not mine. [HON. MEMBERS: "Hear, hear."] I am, however, entitled to my opinion.
It should be stressed that the Chancellor has inflated his borrowing provision to make room for more Government lending to local authorities who previously were getting their money from other sources, and there may be up to £200 million extra this year to lend to local authorities on Exchequer account. Although this is not perhaps of any great economic significance, it is nevertheless of budgetary significance. The out-turn on the Chancellor's Budget estimates looks worse than it really is.
As to the means that the Chancellor has chosen to raise this marginal amount of £100 million extra, we should remember that the House gave the Chancellor of the Exchequer the tools for an urgent repair job in the so-called regulator. He has not used it. It was not flexible enough, apparently. He decided against using it. He decided not to raise indirect taxation right across the board, but to put the whole burden on alcohol and tobacco. Apart from anything else, this adds up to a dangerous concentration of taxation on these two items.
Taxes on alcohol and tobacco equal, if they do not exceed, the total yield from the whole of P.A.Y.E.—£1,300 million. That is wholly disproportionate. It is more than is collected in Income Tax on all profits of all companies, partnerships and individuals. Only the urgency of the economic remedy could possibly justify a further increase in Pay-As-You-Spend while direct taxes on profits, capital gains and the rest remain as they are.
The Chancellor has run true to form by taking off income tax one year and putting it on consumer expenditure the next—£260 million off direct taxation last year; £100 million on indirect


taxation this year. The difference between 1955 and 1964 is that in 1955 the taxation went on pots and pans and this time it goes on alcohol and tobacco.
The use of taxation as an economic regulator—and especially the use of indirect taxation—needs, in my submission, much closer attention. The Chancellor wants to keep the regulator which he already has, but of which he has not made use this time. He wants it to be made more flexible. That means that he wants scope for discrimination, to raise the tax on some things and not on others. As a matter of fact, it was that which the House deliberately did not give to the right hon. Gentleman's predecessor when he first asked for this regulator in 1962. We shall wish to learn more about the Chancellor's intentions and the use that he proposes to make of this more flexible regulator if the need arises. We shall ask him "What will you do with it if the House gives you a more flexible regulator for use between now and the General Election?"
As to the alternative—the use of direct taxation, including National Insurance contributions, for urgent economic purposes—this obviously raises important questions and problems of both equity and administration. When the present Leader of the House proposed to have a second regulator, the so-called pay-roll tax to be imposed by increasing the cost of National Insurance contributions, it was discovered to be of little use because of the time it would take to print new National Insurance stamps of a higher denomination. So that was dropped. In fact, the Opposition opposed it as an ill-conceived proposal.
My hon. Friend the Member for Middlesbrough, West (Dr. Bray) had some interesting suggestions to make on this topic last Thursday, and I hope that we may find time at some suitable opportunity to discuss them. The idea of a variable Pay-As-You-Earn for higher-paid people, speedily brought into operation, would need to be looked at in practical terms. Computers are wonderful things, but they do not do everything. Nevertheless, the search for alternatives is well worth while. The trouble about the regulator which is

confined to indirect taxation is that, once it is imposed, there is a tendency for the additional tax to be kept on for revenue purposes.
We had an example of that after the very first use of it. My hon. Friend the Member for Glasgow, Craigton (Mr. Millan), in a notable speech last Thursday, showed how the regulator had become discredited for this very reason. Now the Chancellor wants to renew it and wants it to be more flexible, and we shall have the opportunity to debate that on the Finance Bill.
I turn now to what I think is the signal failure of the Budget. One of the prime conditions of the upsurge of our economy and the attainment of expansion without inflation is an incomes policy. We are all saying that. The Chancellor has stressed it time and again. My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) has stressed it, too. The Chancellor no doubt feels disappointed and frustrated that he has made so little headway. He may blame the employers or the unions, or both of them in some measure, but he has his own part to play. The Budget, I suggest, gave him the opportunity of bringing an incomes policy nearer. He has not taken it. His part in this matter, apart from being the Chairman of the National Economic Development Council, is in the reform of our taxation system, and he could have made a beginning on that even at this late stage in the life of the Government.
What we call an incomes policy is a matter of human attitudes and human behaviour. It must be realised that the whole history and philosophy of the capitalist system discourages the response needed from the great body of workers. I believe that it will take a fundamental change in the structure of our society to remove the distrust which now stands in the way. The Chancellor could have done something to help; and he has chosen not to.
The Chancellor's new taxes, far from bringing an incomes policy nearer, push it, if anything, a little further away. It is folly to increase the level of indirect taxation while the whole structure of direct taxation is so antiquated and unfair. There will be no incomes policy,


no social contentment and no social justice so long as the rewards of work and endeavour are heavily taxed and the rewards of proprietorship go largely free.
When we are asked plaintively by the Chancellor, "What would you do?", I will tell him of one thing that was in need of his urgent attention. I refer to company taxation. Two recent Reports have told us more about the true level of company taxes than many knew before—the Report of the Comptroller and Auditor General on the Civil Appropriation Accounts for 1962–63, and the Gordon Richardson Report.
I was surprised that the hon. Member for Somerset, North (Sir E. Leather), in face of those two Reports, maintained as recently as last Wednesday that company profits are taxed at the rate of about 50 per cent. That was repeated in the Sunday Times only yesterday. In paragraph 164 the Gordon Richardson Report drew attention to the feature of our system of company taxation which distinguished it from most others. After making comparisons between the level of company taxation in this country and in other countries, the Report says, in paragraph 164:
These comparisons would not, however, be complete unless the tax treatment of dividend were also taken into account. Although the effective rate of tax on companies in this country is 53¾ per cent. in the first instance it has to he remembered that when a company distributes part of its profits in dividend these dividends are not charged again to income tax in the hands of the shareholders. This is in contrast to the system which generally obtains on the Continent
and elsewhere.
The Report of the Comptroller and Auditor General draws attention to one feature of our system of company taxation which resulted in the Inland Revenue repaying in 1962–63 at least £12 million in Income Tax to the recipients of dividends which has not, in fact, been paid by the companies who deduct the tax in the first instance. Not only has it not been paid, but it never will be paid. This, therefore, is a net subtraction from revenue for the repayment, if that is the word, of tax which has never been paid. We can have nearly three Ferrantis for £12 million.
This is a disturbing feature of the operation of our present tax system. Not

only are the present general investment allowances gradually reducing the general level of the taxation of company profits, but they are also opening the possibilities of considerable tax avoidance. The Comptroller and Auditor General's Report, which is before the Public Accounts Committee, is something which I must not anticipate, but it will be surprising if the Public Accounts Committee has nothing to say about this. What is needed is a single corporation Profits Tax to replace Income Tax and Profits Tax, this tax to take no account of the deduction of tax from dividends paid. Tax deducted from dividends would be accounted for to the Revenue in the ordinary way and would not be retained by the company as a set-off against the taxation of its profits, as it is now.
It is not generally understood, and, certainly, people in high quarters have not fully understood, that the clue to this situation is that the company deducting tax at the standard rate from dividends does not account for that tax so deducted to the Inland Revenue; it keeps it and sets the tax against its own tax burden. What is aggravating the present situation is the more generous investment allowances, which are leading to more and more capital profits which do not bear tax at all but from which tax is deducted when they are distributed in dividends.
As to the general level of company taxation, the Gordon Richardson Report draws attention, in paragraph 157, to the gradual reduction in the level of company taxation owing to the operation of the more liberal investment allowances. Yet all we are promised from the Chancellor is a White Paper which, it seems, will be confined to the year of assessment and to simplifying the present complexities of the basis year for Schedule D and the accounts year for Profits Tax by having them both on the same accounts basis. But this will leave the main issue of the level of Profits Tax exactly as it is now.
Some estimates have been made of what is the net percentage level of the taxation of company profits. One very informed estimate which I have seen suggests that it is as low as 37½ per cent.—not 53 per cent.—after the company has deducted tax and kept it. I doubt whether even the highest estimate would


be much above 40 per cent. The Gordon Richardson Reports says that this situation compares favourably with the level of Profits Tax in countries which are our competitors. The legend about the intolerable burden of taxation on profits in this country compared with our competitors is completely dispelled by the Gordon Richardson Report.
I contrast this situation with the level of personal taxation. Last year the Chancellor made a great show of reducing personal taxation. Personal allowances were increased, age exemptions were improved, and so on. On 7th April the Economic Secretary was able to cut quite a dash with a table showing the reduction in taxation as a percentage of income brought about by 10 years of Conservative rule. I said at the time that these were spurious comparisons which were being made between 1951 and 1963 unless adjustments were made for the fall in the value of money.
In column 776 of the OFFICIAL REPORT of 7th April, the Economic Secretary showed that a single man on £400 a year paid 12·4 per cent. in tax in 1951 and only 4·5 per cent. in 1963. "Wonderful!" was the inference of what he said. If a é400-a-year man, in 1951, had received no pay increases until 1963 he would have been at a serious disadvantage compared with the rest of the community. In fact, if a £400-a-year man in 1951 had shared in the general rise in incomes since then, he would be on £800 a year today, and his tax on £800 a year at present would be 15 per cent. of his income, not 4·5 per cent. or even 12·4 per cent.
In real terms, the proportion of tax taken from that man today is greater than it was in 1951. A married man with no dependants getting £750 in 1951 paid 18 per cent. of his income in tax. If he shared in the general rise in incomes and was getting £1,500 a year in 1963, he would still pay 18 per cent. of his income in tax. In fact, if he were on the equivalent rate of pay of 1946 he would even then be paying 18 per cent. of his income in tax.
Notwithstanding the drastic cuts in the level of personal taxation, in real terms that man is as heavily taxed today as in 1946. Notwithstanding the improvements in personal allowances to £200 in the case of a single person and

£320 in the case of a married couple, those allowances in real terms are lower than the corresponding allowances in 1946. In terms of 1946 purchasing power, the present child allowance is just £10 a year more than one got in the heavily taxed immediate post-war period. A man married with one child and on less than the average wage is still paying £1 a week in taxation even today.
That is the comparison to be made between the falling level of company taxation and the static or increasing level of taxation in real terms of individuals. I am not suggesting that there was room this year for a substantial reduction in personal taxation, but certainly a study should be made between those two important sectors of taxation.

Mr. Norman Cole: I am sure that the hon. Member wishes to be fair to the great number of people who no longer pay taxation hut who paid it in 1951. Or does he think that that is not important?

Mr. Houghton: There are many people today, married women, young persons, even adults who are on levels of pay which in real terms are below the levels of pay of 10 years and 15 years ago. They were not taxed then and they are not taxed now, but those who are taxed are being taxed at a level in real terms equal to that of earlier years.
As for the level of personal taxation, this year there was something which the Chancellor of the Exchequer ought to have done. Although he improved age exemptions and small incomes relief last year he of ought to have done it again this year. It is becoming quite impossible to justify taxing the aged and retired whose incomes have probably been cut by half or two-thirds on retirement and who have only just over £6 a week in the case of a single person and £10 for married couples.
With 4s in the £ as the lowest rate of tax, the marginal rates in these cases, notwithstanding marginal relief, can be quite indefensible. The right hon. Gentleman, for about £5 million could have carried age exemption and small incomes relief much further than he did last year. I hope that this is one thing which we on this side of the Committee would have done had we had the opportunity.
But for a bold leap into tax reforms necessary to make an incomes policy possible, the Chancellor could have turned to the short-term capital gains tax. My hon. Friend the Member for Cardiff, South-East was pressing the Economic Secretary, on Thursday, to tell the Committee how much has been collected from this tax. I know that for administrative reasons it may not have been possible to distinguish in gross tax receipts between amounts raised under Case I, Case IV, Case VI and Case VII of Schedule D, but surely the Chancellor's curiosity must have got the better of him a few months ago to ask the Inland Revenue what assessments have been raised under Case VII of Schedule D, How can the Chancellor play "Monopoly" on Sundays without knowing what has been gathered from this exciting tax which was introduced a few years ago and which was really the gimmick introduced by the then Chancellor of the Exchequer to reconcile the trade unions to the pay pause?
We ought to know, and I hope that the Chief Secretary to the Treasury can tell us, something about the outcome of the first year of Case VII of Schedule D. We on this side of the Committee have said many times that we would bring greater equity into the tax system by strengthening this capital gains tax. The absurdities of it require no emphasis. Capital profits on share transactions within six months are taxed, but six months and a day and they go free. Capital profits on land bought and sold within three years are taxed. After that, they are exempt. No wonder the brokers tell their clients when the six months are over. No wonder that we see land and houses bought and held, often derelict, waiting for the three years to be up.
If there are hon. Members opposite who think that this tax should be abolished I hope that they will say so. If they think that it should stay as it is I hope that they will say that too. If we accept the principle that realised capital gains are disposable income indistinguishable in social and economic terms from any other form of income, much will follow. Whatever exemptions and abatements may be thought desirable, the taxation of realised capital profits as income would follow as a

matter of principle. That, at least, would make profits on share transactions as good a subject for Income Tax as the profits on writing a book.
Will the Government defend the present time limits? If so, on what grounds? Does the period of accrual change the nature of capital profit, or call for some relief from tax? If the time limits for tax liability are to be made longer or even indefinite, can the new tax be confined to new transactions, new investments only, made after the appointed day? A tax liability which runs out in six months or three years may apply to new investments only without being particularly unfair. But would it be fair to confine a longer-range tax to new investment only? If so, it could take almost a generation to become fully effective.
If the tax is to cover all capital profits realised after the appointed day, on the basis of the value of the assets on the appointed day, there is the obvious problem of valuation of all assets within the scope of the tax as at that day. The question arises, who will do that and what should be the basis of the valuation? But it was this Government who introduced this tax. It was their piece of window-dressing. It is now shopsoiled and I am inviting the Chancellor to show us a new model.
A White Paper setting out Government ideas for a real capital gains tax instead of a sham would have been of wide interest. It would have made it easier to follow if we had also been given draft Clauses of a Finance Bill to implement the Government proposal. To use the Financial Secretary's phrase, "We are all ears". Meanwhile, we on this side of the Committee must obviously continue our consideration of a wide range of tax reforms which may be more suited to the times in which we live and to the features of an expanding economy.
I know, of course, that to ask for a White Paper from the Government on a proposed wealth tax would be expecting too much, but what a morbid interest many people have in the Labour Party's intentions about this tax. Nobody can leave my hon. Friend the Member for Cardiff, South-East alone. Hon. Members opposite have an obsession about capital ownership. They try out the legend of the goose and the eggs. They


put the taxation of capital on the same footing as the desecration of a holy relic. Yet in the last Report of the Commissioners of Inland Revenue, in some very interesting new tables on the estimated distribution of wealth in this country, one finds that 16 million people possess less than £3,000 and that of these 2 million are on National Assistance. There are 31,000 people who have an average of £250,000 each and 7,000 who have an average of £500,000 each.
What moral, social or political judgments do hon. Members opposite bring to bear on these figures? I hope that we shall hear later in the debate. Does the possible attitude of the 38,000, or any other number of the richer people, matter more than the feelings of social contentment and social justice of the 16 million? Is not an incomes policy worth having even at some small sacrifice by the well-to-do?
Besides, we on these benches are a Socialist Party. Hon. Members opposite never tire of saying so. Why, then, should we fail to mention it? This means greater equality, economic freedom and political freedom, and we have social aims also which differ quite materially from those of the party opposite. When we come to power, later this year, we intend to be something more than a more efficient Tory Government, otherwise people might just as well look for more competent Tories—if there are any.
We are studying other tax changes, too, including the dividend equalisation tax outlined in a most interesting speech by my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins). We are looking at tax reform in the short run, in the long run, and in the round as well. There has been no radical change in the structure of our tax system for over 50 years. It is time that we sat back and had a good look at it. The forthcoming Labour Government may have some pioneering work to do in this field to match the great tax reforms of the past.
I was sorry to see that the Sunday Times was inferring only yesterday that the sort of tax reforms we might consider would be a return to high taxes. A fairer distribution of taxation in an expanding economy—that we certainly aim to do. The present tax structure

cannot be defended in present conditions. It is so manifestly unjust, and we shall not be indulging in what the Sunday Times calls our "antiquated emotional prejudices" if we aim at reforming it.
We are resolved that the enormous additional revenue needed for expansion and modernisation of social programmes—roads, houses, schools and the rest—shall come not out of higher taxation, but out of higher production, greater exports, a higher national income. That is the healthiest source of extra revenue. We aim at releasing the pent-up desire of our people to set their hands to a worthy national purpose.
This is the last Conservative Budget of the 1960s. It has not sent a ringing message to our people or to the rest of the world. Beside the challenge of our time, the Chancellor's proposals seem paltry and lacking in courage and imagination. A Labour Government will shortly proclaim our faith in Britain and our plans for the future. This country has enormous reserves of both will and skill, and we shall call upon both and get a response which will confound the Tories and gratify our friends everywhere.

4.22 p.m.

The Chief Secretary to the Treasury and Paymaster-General (Mr. John Boyd-Carpenter): We have had three days of debates in this Committee and rather more of discussion in the Press outside on my right hon. Friend's Budget before we came, for the first time, in the last few minutes, to a criticism of the central issue of the Budget—my right hon. Friend's judgment of the need to withdraw about £100 million worth of purchasing power from the economy.
The earlier speeches from the Opposition Front Bench, and, indeed, the great majority of comments outside, have appeared to accept that my right hon. Friend was right in what, as he himself said, was fundamentally an exercise of judgment. But the hon. Member for Sowerby (Mr. Houghton) now comes forward, with that courage which the Committee greatly likes and admires in him, to say that he, at any rate, whatever anybody else may do, disagrees with it. That recalls to those


of us who took part in last year's debate how he stood out with equally sturdy individuality against the abolition of Schedule A.
But the hon. Member's judgment in this matter, I think, commands less respect when one reflects for a moment on his reference to the exercise of my right hon. Friend's judgment last year. He said that my right hon. Friend had only been, I think he said "saved", because revenue had been higher and expenditure lower than he forecast. That is all very well, but the Committee will remember how, last year, the chorus of criticism came from the benches opposite that my right hon. Friend had nothing like gone far enough. The hon. Members for Cardiff, South-East (Mr. Callaghan), the right hon. Member for Battersea, North (Mr. Jay), and other hon. Members opposite, all declared that my right hon. Friend had been too timid. I think that the Committee will view the judgment in this matter of the hon. Member for Sowerby a little in the light of that comment of his.
Before I pass to my main argument, may I take the point that the hon. Member sought to make about the fact that the yield of the speculative gains tax is not yet available. I was surprised that the hon. Member, of all hon. Members, should raise this point. As the Committee knows, his knowledge of the machinery of direct taxation is probably better than that of anybody else in the House, and, therefore, his inability to appreciate the reasons was all the more curious.
If the hon. Gentleman will recollect, this tax, which my right hon. and learned friend the Leader of the House introduced in 1962, came into operation some time in the financial year 1962–63. In the nature of things, no yield would accrue to it as far as Stock Exchange transactions were concerned for six months and, as far as land transactions were concerned, for three years. [Interruption.] The hon. Gentleman is getting the truth. He always gets it when he is willing to listen. I am not on the merits of the matter at the moment, although I shall be happy to debate them with the hon. Gentleman. I shall discuss this kind of taxation and the hon. Gentleman's attitude towards it

in a few minutes. I am trying to answer the perfectly proper and legitimate question that he has put as to why these figures are not yet available.
As far as transactions in land are concerned, we have not reached the point where those begin to be assessable-As to transactions in stocks, it would be six months from whatever date it was in the financial year 1962–63 when my right hon. Friend's measure came into effect. Those gains are not generally assessed until they have been reported, normally at the end of the tax year, and therefore, as the hon. Gentleman knows, they appear in an assessment in the following year. They are, therefore, not yet known—

Mr. James Callaghan: Hear, hear.

Mr. Boyd-Carpenter: I am glad to see that the hon. Member for Cardiff, South-East shows a quicker comprehension, for once, of the mechanism of taxation than does the hon. Member for Sowerby.

Mr. Douglas Jay: I am sure that the right hon. Gentleman is right, but will he say at what date we shall, for the first time, know what the revenue from the tax is?

Mr. Boyd-Carpenter: Without complete precision, I can say that a figure will be obtained towards the end of the present calendar year. But it will not be the complete total, because in that part of it which is attracted into Surtax there is an element of delay, too.

Mr. Callaghan: It amounts to this, that no revenue has been collected three years after the pay pause started.

Mr. Boyd-Carpenter: I thought that I had explained this in words of one syllable. What I have tried to explain is that the figures for the amount collected are not yet available to give to the House. I think that the hon. Member for Sowerby understands this.

Mr. John Diamond: rose—

Mr. Boyd-Carpenter: I must get on.
Apart from that issue, there have been only two main criticisms of my right


hon. Friend's Budget. The first of these as the hon. Member for Sowerby repeated, was that it was dull and unoriginal. The second was that the increased taxation, which I think the Committee, apart from the hon. Member for Sowerby, regards as necessary, should have been raised by Profits Tax and not by increasing taxation on alcohol and tobacco.
On the first point, I am sure that the Committee will agree that in a matter of such serious importance to the working of our national economy it is much more important to be right than to be original. My right hon. Friend was plainly right in his budgetary judgment last year. [AN HON. MEMBER: "But not original."] It is, of course, very easy to be original if one cares to be unsound. During the course of last week I had a letter from a gentleman who resides in one of the outer suburbs of London—I hasten to say, not in the Royal Borough of Kingston upon Thames, where people are too intelligent—

Sir William Robson Brown: Nor in Esher.

Mr. Boyd-Carpenter: Nor in Esher.
It was a letter criticising my right hon. Friend for not having levied further taxation by imposing a tax on churches and churchgoing. The objectivity of that undoubtedly original suggestion was perhaps a little diminished by the fact that my correspondent concluded with a complaint that the halls where atheists meet to do whatever atheists do when they meet are not derated.
But the real criticism sought to be made was that, accepting the Budget judgment—the need to impose £100 million extra taxation—my right hon. Friend should have done it by taxation upon companies. That was the view of the hon. Member for Sowerby. The right hon. Member for Battersea, North and the hon. Member for Cardiff, South-East thought that, in particular, this should have been done by way of Profits Tax. Indeed, the right hon. Gentleman went so far as to say that the only reason that it was not so done was simply political prejudice, and I would like to analyse that.
I remind the Committee that it might be an odd way to encourage industry by imposing additional taxation on profits.

However, let us reflect on the purpose of my right hon. Friend's action in imposing additional taxation. It was to withdraw £100 million from purchasing power in the present state of the economy and in the light of rising public expenditure. If my right hon. Friend had tried to do it in the way suggested by the right hon. Gentleman, this year there would not have been the effect desired. To get the annual revenue needed, it would have been necessary to increase the present Profits Tax from 15 per cent. to 18 per cent., but, of course, all the revenue yielded additionally in that way would, owing to the mechanism of the Tax, have amounted in the current year to only a comparatively small amount. Even in the next financial year only £64 million would be raised. In fact, the third year would be reached before the full result was obtained.
The Committee will, therefore, appreciate that, to have imposed this additional taxation by way of Profits Tax increases—other considerations apart—would not have effected my right hon. Friend's purpose. It was not to impose additional taxation for the love of it but to extract that amount of purchasing power from the economy that my right hon. Friend raised this additional revenue. To have done it any other way would have been, to use the phrase of the right hon. Member for Battersea, North, sheet political prejudice.

Mr. Jay: Does not the right hon. Gentleman realise that, if there is an increase in taxation on Profits Tax, companies take that into account in their decisions on dividends before the tax is actually being dealt with and that, in this way, purchasing power is withdrawn?

Mr. Boyd-Carpenter: I do not think that they do. But I am going on to analyse how this would have worked even if the Chancellor, for political prejudice, had wanted to do it in the way suggested and had been prepared to disregard the time factor. It is by no means certain that, even in the future, it would have achieved his purpose, because companies could have reacted in one of three ways.
It would depend on the way they reacted whether, even at the remoter date, his purpose would have been achieved. First, they could have reduced dividends. This would, in some measure, have


achieved his purpose at that date, although, of course, some of the reduction would have been in respect of dividends payable to pension funds, charities, and so on, which would not be directly relevant to the immediate withdrawal of purchasing power.
Secondly, companies might, also—although probably this would be unlikely in many cases—have increased prices. That would not have been very helpful from the point of view of exports. Or, thirdly, they might—and this is probably most likely—have reduced the amounts put to reserves and used for investment. This would have been the exact opposite of the economic effect which, at the time when we are trying to increase production, we wish to achieve.
Therefore, the answer to the criticism of the right hon. Member for Battersea, North and the hon. Member for Cardiff, South-East is that to have done this in the way they suggest—through Profits Tax—would, first, have fallen down badly on the time factor and would never have had the desired effect in due course, if at all, if companies happened to react in one of these three particular ways.
The right hon. Member for Battersea, North linked this complaint with a general one. He said several times that, over the years, it had been our policy to transfer the burden from direct taxation to indirect taxation and to the National Insurance contribution. My hon. Friend the Financial Secretary showed that the right hon. Gentleman was wrong about indirect taxation and that the proportion taken for it in the current financial year was marginally rather less than in 1951–52. But the right hon. Gentleman said that this argument did not convince him because he was not including the National Insurance contribution. But I suggest that that, equally, is as invalid as his original criticism.
To begin with, I do not regard the National Insurance contribution as a tax. It is a contribution, as its name implies. It qualifies the person who makes it for a highly subsidised benefit payment. I know of no other alleged tax of which this is true. In any event, it would be unfair to bring it into this calculation without also bringing in—the right hon. Gentleman did not do so, however—the very large increase in

National Insurance benefits that have taken place over a period.

Mr. Walter Monslow: The right hon. Gentleman talks of benefits. Will he also quote the purchasing value of the £ now, at 13s. 9d., as compared with 20s. in 1951?

Mr. Boyd-Carpenter: I will quote the hon. Gentleman the real increase in the value of benefits later in my speech. At the moment, I am dealing with the right hon. Member for Battersea, North.
Even giving the right hon. Gentleman his point in criticising us for increasing the National Insurance contribution—although it has nothing to do with taxation—it is a very odd criticism from the Front Bench opposite. After all, it was the late Hugh Gaitskell who, in 1951, reduced the Exchequer contribution to National Insurance, as the hon. Member for Sowerby will remember.
Even more striking was the statement by the hon. Member for Cardiff, South-East, when he interrupted the Chancellor during an economic debate last month. My right hon. Friend had asked how the Labour Party superannuation plans were to be paid for and how they fitted in into the general pattern of public expenditure. The hon. Member said:
I am telling him now—although I am sure that he knows it already—that the superannuation scheme will be self-financing. That has nothing to do with the level of Government financing."—[OFFICIAL REPORT, 11th March, 1964; Vol. 691, c. 477.]
If that means anything—and I leave it to the hon. Gentleman to explain—it means that the increased benefits promised would be provided wholly without recourse to the Exchequer. Otherwise, it is meaningless. In other words, the contribution would be entirely shifted on to the ordinary contributors, which is contrary to every previous scheme of National Insurance. Three contributors—the Exchequer, the employer and the employee—have so far each played a part in our National Insurance scheme.
If the hon. Gentleman's intervention is right it does not lie in the mouth of the right hon. Member for Battersea, North to criticise us for lifting the scale of the National Insurance contribution. To use a colloquialism, he is criticising the mote which he has tried to put in our eye while a ruddy great beam is sticking out of his own.

Mr. Callaghan: I hope that the right hon. Gentleman will continue to read our pamphlets with great care. It is quite clear that contributions, instead of being on a flat rate, would, under a decent superannuation scheme, be related to income.

Mr. Boyd-Carpenter: The hon. Member has not addressed his mind to the point. Is the Exchequer contribution not to be increased?

Mr. Callaghan: It is the right hon. Gentleman who is missing the point. We are dealing with the relative burdens borne by people and the attack on the Government at present is that they have been singularly unfair over the last 12 years in transferring the burdens. Clearly, the National Insurance contribution should be related to income. That would be far fairer than imposing a continuing increase in flat-rate contributions, which is regressive.

Mr. Boyd-Carpenter: The hon. Gentleman cannot duck the point as easily as that in this Committee, whatever he may try to do on television. His intervention was to the effect that this superannuation scheme of his hon. Friends did not, in his own words, affect national financing, that it was self-financing. Will he now tell us, therefore, whether that means or does not mean that the whole of the increased benefits would be paid for by employers and workers, without additional Exchequer contribution?

Mr. Callaghan: I cannot give a complete reply to that. [HON. MEMBERS: "Oh."] Oddly enough, we are discussing the Budget and not the legislative programme of the next Labour Government. It would be quite absurd to give a complete reply to that. But I can say, because there is no reason why we should not, that it is our intention and expectation that this scheme will be at least mainly self-financing—[HON. MEMBERS: "Mainly?"] How can anybody say that it will be wholly self-financing? [HON. MEMBERS: "The hon. Gentleman did."] I know. It was in response to an intervention by the Chancellor of the Exchequer.
I take it that we are trying to argue as grown men, or is it just the case of scoring points? If we are discussing it as grown men, as I trust we are, any

new superannuation scheme related to a man's income would be more progressive than the existing scheme, which is related all the time to flat-rate contribution increases. I believe, therefore, that this will be a move in the direction of fairness which the country as a whole wants to see and which the Government have singularly failed to achieve.

Mr. Boyd-Carpenter: The hon. Gentleman said that no one could say whether it would be wholly self-financing, but that is exactly what he said. If he is now telling us that it was wrong, we accept that; but then the whole of the argument, that this would not affect Government expenditure, as he implied in the debate, is equally invalidated by it. Either the hon. Gentleman was wrong then, or it is particularly curious that he should agree to his right hon. Friend saying that we are the people who are trying to shift things on to the National Insurance contribution.
The hon. Gentleman referred quite properly to the possibility of the increased tax on tobacco and alcohol affecting what, still using the old-fashioned phrase which he affects, he calls "old-age pensioners", but which the Committee knows to be retirement pensioners. I agree with him that it is necessary carefully to watch the effect of any changes on the retired section of the community generally, and the fixed income groups. But the Committee will recall that, thanks to successive increases in National Insurance benefit, the situation now is very different from what it was even a few years ago.
The Committee will remember that my right hon. Friends and I pledged ourselves in the 1959 Election to ensure that pensioners continued to share in the good things which a steadily expanding economy would bring. Can I tell the Committee how that pledge has been carried out?

Mr. William Hamilton: They will tell the right hon. Gentleman.

Mr. Boyd-Carpenter: I think that they will.
Since that date, weekly wage rates have risen 17·8 per cent.; average earnings, 23·5 per cent.; and retirement pensions, single rate, 35 per cent., married couple rate, 36½ per cent.
The hon. Member for Cardiff, South-East opened his speech the other day by saying that he was not bothered about the Budget—I am bound to say that he did not say very much about it—but would set out the alternative policies which he suggested we should have followed and which, he said, hon. Members opposite would intend to follow if successful in the election. I must, therefore, probe a little further.
The hon. Member for Sowerby mentioned the proposals for a wealth tax and asked us if we had any. I shall ask for a little more illumination about this. The hon. Member for Cardiff, South-East has been a little "cagey" about it. My right hon. Friend the Secretary of State for Industry and Trade asked him about it on Wednesday, when the hon. Gentleman said:
…obviously, he did not listen to my speech. Perhaps he will do me the honour of reading it tomorrow. He will find answers to both the questions he has put so far".—[OFFICIAL REPORT, 15th April, 1964; Vol. 693, c. 454.]
I have read that speech through several times, but I have not seen the answers.

Mr. Callaghan: Read it again.

Mr. Boyd-Carpenter: Nor was it answered when Mr. Robin Day asked the same question on television that night.
It is crucial that the hon. Gentleman should make this point clear, because of the effect on savings. In his Budget speech, my right hon. Friend pointed out the importance to the Budget judgment of the assumptions which could be made as to the level of savings. He gave the Committee the very striking figure that a reduction of 1 per cent. in the amount of personal income saved would reduce savings by £200 million in a year and certainly alter the facts on which taxation judgment would have to be based. A wealth tax would plainly affect willingness to save. I do not think that even the hon. Gentleman would dispute that.

Mr. Callaghan: Would it?

Mr. Boyd-Carpenter: It is the old capital levy dressed up now under a new name of wealth tax apparently to make it more agreeable. Hon. Members opposite

might as well call it "soak the savers" and have done with it. But if it is not the intention to impose it, the hon. Gentleman should reassure savers by saying so, and, if it is his intention to impose it, having been asked again and again and holding himself out as the "Shadow" Chancellor of the Exchequer, he should tell us whether he thinks it right. There is nothing to be ashamed of in that, but there is something to be ashamed of in declining to tell the public and the Committee what his intentions are.
The hon. Gentleman and his colleagues have never fully understood the significance of savings in our national economy. In particular, they have not appreciated that one of the foundations of the improvement of our economy in recent years is that whereas personal savings were running at a level of £100 million a year when they left office in 1951–52, the latest figures for last year are 19 times that, at £1,900 million. No Conservative Chancellor of the Exchequer likes imposing additional taxation, but I am not quite sure that some hon. Members opposite quite share that view. Taxation has almost a physical attraction to the hon. Member for Sowerby.
None the less, I think that the Committee will want to weigh the increase in taxation against the solid and valuable improvements which we are getting in exchange. In this year's published estimates we are to spend £34 million a year more on universities; £32 million a year more on roads; £59 million more on health and hospitals; £13 million more on research; £17 million more on benefits and assistance; and £93 million more on grants to local authorities, mainly, of course, for education.
On the subject of public expenditure, I welcome the interest which, rather late in the day, the hon. Member for Cardiff, South-East has taken in the subject of restraint. There is more joy in heaven, proverbially, over one sinner that repenteth than over dozens of just Tories who need no repentance. The Committee will remember that, until the hon. Member on the road to Wembley underwent a conversion rather parallel to that which took place earlier on the road to Damascus, the whole line of right hon. Members and hon. Members


opposite in all our debates had been to denounce us as skinflint, niggardly, mean—the Committee will remember debates on pensions, universities, education, pay, local authorities—in each debate making demands for increased expenditure over and above what the Government were undertaking.
Now the hon. Gentleman comes along—and I welcome it—and, on 9th November, charges us with the biggest spending spree ever by any Government in peace time. He indulged in somewhat the same theme, although with a somewhat more retricted scope, on Wednesday, restricted because he confined his detailed criticisms to production for national defence. There was not a single detailed criticism outside defence, which is perhaps significant.

Mr. Callaghan: This is not fair. Speaking off the cuff, I remember criticising the Government's failure to co-ordinate imports into South Wales and I remember commenting that they had never been able to close the tax gap of £12 million, discovered by the Comptroller and Auditor General, which had been repaid I remember giving four illustrations, although for the moment I do not recall the other two.

Mr. Boyd-Carpenter: I sympathise, but those are not Government expenditure. The first was concerned with proposals to be made by industry in industry's judgment as to a good and effective method of undertaking imports. That does not help him.
The hon. Gentleman spent a great deal of time reading with gusto accounts of weapons of war which had been abandoned.

Mr. Callaghan: Will the right hon. Gentleman withdraw his allegation that I gave no illustrations?

Mr. Boyd-Carpenter: No. I studied the hon. Gentleman's speech with great care, and if he re-reads it he will see that none of the examples that he gave concerned question of Government expenditure. One was concerned with taxation, and the other with industry.

Mr. Callaghan: No.

Mr. Boyd-Carpenter: The hon. Gentleman cannot get away with it by saying

"No" while adopting a sedentary posture.
The hon. Gentleman referred to various weapons of war whose development had been halted at one stage or another. Both he and the Committee know that when one is indulging in research in advanced weapons of war—[HON. MEMBERS: "Oh."] Hon. Gentlemen may not care for national defence, but we on this side of the Committee do.
When one is developing weapons of war one is working on what a former Director of the Royal Aircraft Establishment called the edges of knowledge. It is obvious that lines have to be developed for quite a distance before it is known that they are not as satisfactory as they might have been and do not measure up to the performance which can be met by other weapons. If we do what the hon. Gentleman suggests, and develop only one weapon, we shall be left in a difficult situation if it turns out to be a failure.
This is not an experience which is unique to us. In the United States of America, during the last 10 years, 61 projects have been abandoned before going into service, at a cost of more than £2,000 million. Nor is this situation unique to a Conservative Government. Hon. Gentlemen opposite may remember the Brabazon aircraft and the Princess flying boat.
I turn now to something even more important. Does the hon. Gentleman accept—I think that he does—that the level of expenditure forecast in our White Paper to 1967–68 is the most that our economy can carry? He was asked a question about this during the television programme to which I referred earlier. He was asked, "Does the Labour Party accept that?", and he replied, "You heard me. You heard Mr. Heath quote me in the House this afternoon as having said the same thing". I take it that he accepts that view, but the Opposition as a whole must "come clean" on this, because, while the hon. Member for Cardiff, South-East—and I say this to his credit—takes the line that he has done on this matter, it is not the line adopted by the Opposition generally.
I do not know how many hon. Members saw the Labour Party political broadcast as recently as 8th April, less than a fortnight ago. The Leader of


the Opposition, the hon. Lady the Member for Lanarkshire, North (Miss Herbison), the hon. Member for St. Pancras, North (Mr. K. Robinson), and the hon. Member for Fulham (Mr. M. Stewart) took part in that programme. This is what happened. Speaking about prescription charges, the hon. Member for St. Pancras, North said:
A Labour Government would abolish the charges completely",
and added that he knew that it would cost a lot of money. The present yield of the charges is £24 million.
The hon. Member for Lanarkshire, North said:
We shall establish a minimum income under which no old person will be allowed to fall. They will have this income as of right without any recourse to the National Assistance Board.
How much that will cost will depend on what figure they fix, and unless they fix a farcical figure, the amount will be very substantial indeed.
The hon. Member for Lanarkshire, North then said:
A Labour Government will abolish the earnings rule.
I am not sure whether she meant only for widows, which would mean a figure of £6 million to £7 million, or for everyone, which would mean a figure of over £100 million.
The hon. Member for Fulham said:
A Labour Government will give financial help to local authorities so that they can grant mortgages at favourable rates.
The hon. Member for St. Pancras, North talked about deficiencies in the hospital service, which, he said, a Labour Government would remedy. The hon. Member for Lanarkshire, North said:
We realise that our educational plans will cost money, but we also realise the importance of carrying them out.
Finally, the hon. Member for Fulham said:
It is Labour Party policy that a decidedly bigger share of the total cost of education should be placed on the central Government.
It is not good enough that the hon. Member for Cardiff, South-East should seek to take a responsible attitude and say that further expenditures over and above those in our plans are not possible, and then his hon. Friends should appeal to the British public for votes on the basis of a whole collection of in-

creased expenditure. Let me warn hon. Gentlemen opposite that that was just the ambivalent policy which brought them to defeat in 1959, and that it will do so again.
The hon. Member for Cardiff, South-East quite properly referred to the question of public investment, its control, and the load on the construction industry. He stressed, and I agree with him, that if the construction industry is overloaded there will be extravagance and delay. My right hon. Friend the Minister of Public Building and Works is hard at it seeking to modernise methods of construction and introduce industrialised methods. But that will not meet all the demands over the next few years, and, therefore, it is necessary to exercise some supervision of the investment programme.
The hon. Gentleman said that a Labour Government would co-ordinate public investment. That is what we are doing. We are co-ordinating the capacity of the building industry and the resources available in particular areas. We make a careful survey of various demands, and regulate public service investment accordingly.
How much further would the hon. Gentleman go? He referred to more planning and more starting dates. Does he mean licences for building private houses? Apparently he does not want to intervene, so we can draw our conclusions. Those of our fellow citizens—and there are hundreds of thousands of them every year—who want to build houses for themselves will not think it quite so funny.
The right hon. Member for Battersea, North attacked the South East Study on the ground that it cancelled out our plans for the North-East and Central Scotland. If the hon. Gentleman reads paragraph 30 of the White Paper, he will realise that what he said is nonsense. He will see, on the contrary, our pledge to give priority to Central Scotland and the North-East, and that development under the South East Study has to be fitted in with that.
The Leader of the Opposition made a very interesting speech on Tuesday. It contained one phrase which, I think, struck the Committee. He was taking the line not of criticism of my right hon. Friend, but of sympathy for him


in the difficulties that he thought he was in following what he called the incubus of 12 drifting years. Mercifully, that "drift" has taken us a long way from the starting point. It has taken us away from the standard rate of Income Tax at 9s. 6d. in the £ away from the top rate of Purchase Tax of 100 per cent.; away from food rationing when one received 1½ ozs. of cheese a week; and away from a balance of payments crisis. The right hon. Gentleman the Leader of the Opposition may have forgotten that, because, prudently he left that Administration a little before then.
The ideas of the right hon. Gentleman about drifting are rather curious, because these 12 years have seen the biggest advance in the standard of life of our people in any comparable period, or in any longer period, with more social progress than in any 50 years of our history. House building went up from 195,000 in 1951 to nearly 350,000 this year. In that period 6,440 schools, or nearly 10 a week, were built. Pensions increased in real value by 50 per cent. The pension of a widowed mother with children increased 100 per cent. Hospital building went up from £13 million in 1951, to £64 million this year. In 1951, £2 million to £3 million were spent on the construction of new roads. Last year we spent £124 million for that purpose.
Further, as the Committee knows, the increase in individual material wellbeing was such as we have never seen before, with the motor car passing from being a badge of wealth to becoming the instrument of ordinary people, with three times as many registered as there were at the beginning of those drifting years. The increase in the number of television sets—

Mr. Houghton: In view of this glowing picture of the Promised Land, can the right hon. Gentleman explain why the whole country is turning against the Government?

Mr. Boyd-Carpenter: I do not think that it is, nor, in his heart of hearts, does the hon. Gentleman think so, or he would not have shown such temper about having to wait until the autumn for the General Election.
I am dealing with—I am sorry that he is not here—the right hon. Gentleman the Leader of the Opposition. [An

HON. MEMBER: "Nor is the Prime Minister"] The Prime Minister did not take part in the debate. I well understand the hen. Gentleman opposite getting a little sensitive about these rising standards of the, life of our people. I think that perhaps most striking is the rise in personal it comes, by which I do not mean—and I anticipate hon. Gentlemen—the rise in incomes of a few rich people but of the great masses of our population. Let me give the Committee the figures.
In 1951, the people in the range of incomes before tax of £750 to £1,000 a year, that is, from £14 10s. a week up to about £1,000 a year, were 819,000. The latest figures we have are for 1961–62. At that time there were nearly 4 million. If we move, up the scale to the bracket of £1,000 to £1,500 a year, the figure rose by eight times from 420,000 in 1951–52 to 3,400,000, and the Committee will appreciate that as those are the 1961–62 figures, must be present figures must be higher still.
The Budget is designed to continue that progress, to enable expansion to be maintained at a rate sustainable without inflation, and to enable us to carry further these improvements on the lines of the White Paper on Public Expenditure up to 1967–68.
No alternative has been offered during the course of these debates, and that is not surprising because financial policy has always been the weakness of the Socialist Party. For whatever reasons, it remains the fact that two out of three Socialist Governments ended in a financial crisis and the only one that did not lasted for only nine months. That was because of their inherent prejudices against so many sources of wealth and their inherent weakness in resisting claims for public expenditure. It brought down two Socialist Governments, and I think that this debate shows that the Socialists have not yet earned the lesson. We shall teach them that lesson tonight in the House and at the polls in the autumn.

5.4 p.m.

Mr. James Boyden: The right hon. Gentleman the Chief Secretary to the Treasury chided the Labour Government but he seemed to have forgotten that the Conservative Government discovered industrialised building only after a lapse of about 11 years, and


when they applied their minds to industrialised building the theory of drift operated. We heard at Question Time today that the Talavera Park Estate at Aldershot, under the auspices of his right hon. Friend the Minister of Public Building and Works, drifted one quarter of an inch and the walls bulged; an officers' mess constructed in July drifted a bit more and fell down. That seems to be the likely result of the right hon. Gentleman's ignorance of the political trend of the nation.
According to the latest N.E.D.C. Reports, the Government have not sufficient industrial statistics to be either original or right in their economic policy. Perhaps I might be permitted to relate the effect of the Budget on the construction industry as a case study in incomes policy and export policy. Both the Chancellor of the Exchequer and my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) had important observations to make on this industry. So important has it become that N.E.D.C. stated:
The possibility cannot be ruled out that by falling short the construction industry may hold back the expansion of the economy as a whole.
I want to draw attention to some of the misleading things, for example, that the Chancellor has been saying about the construction industry. In his speech on Tuesday last he said
…output has risen fairly steadily since building controls ended in 1954. both because the Labour force has increased and because output per head has improved".
This is a most misleading statement. The Chancellor knows very well that the key to expansion in the building industry is the number of skilled craftsmen that can be recruited. Since 1955 the number of skilled craftsmen has been steadily decreasing. In 1955 there were 120,000 bricklayers and 34,000 plasterers, in 1960 only 110,000 bricklayers and 31,000 plasterers, and in 1962, 109,000 bricklayers and 30,000 plasterers. So the situation has deteriorated very steadily and persistently ever since the Conservative Government have been in office.
As for productivity, it is quite possible to refer to particular firms and particular aspects of the industry and show increases but in fact the overall productivity is stagnant. Table 2 of the

N.E.D.C. Report on the construction industry shows: in 1961, an index of productivity of 100, in 1962, 99 and in 1963, 100. Both the Chancellor and N.E.D.C. accept all too easily the shortage of skilled labour in the construction industry as being beyond much remedy. The Chancellor said:
There are no prospects of large additions to the labour force."—[OFFICIAL REPORT, 14th April, 1964; Vol. 693, c. 256.]
N.E.D.C. is thinking in terms of an increase of 2 per cent. in 1964, 1 per cent. in 1965 and 1 per cent. in 1966. In a recent debate on 17th March on the Consolidated Fund Bill several of my hon. Friends drew attention to some of the methods by which this situation could be much improved. My hon. Friend the Member far Hayes and Harlington (Mr. Skeffington), for example, referred to the Ministry of Labour Training Centres which suddenly the Government have realised needed to expand. The fact is that in 1963, in the middle of this crisis, there were only 230 men being retained in Government training centres for the building industry and at the moment there are only 400 places. There are 1,400 places planned for the end of 1964, but it is very significant of the lack of economic planning of this Government that in respect of those places most of the financial provision has had to come this year by way of Supplementary Estimates, despite the fact that in Scotland and the North-East there is a considerable number of unskilled building workers out of work, and they have been out of work for a long time.
The shortage of apprentices was referred to in this debate on many other occasions. The number of apprentices short today in the building industry is 5,000 out of a total of 25,000. The trade unions have played a more substantial part in easing the problem of the building industry than have the large firms, because it is by their agreement that apprenticeship has been reduced from five years to four years. It is a well-known fact that many of the largest and most efficient firms in the industry have very few apprentices.
If one turns to the rewards received by the building industry workers, one can see why the moral appeal of the Government is apt to fall on dull ears


because the general position of the building worker has steadily deteriorated since 1951. The average hourly rate of the building worker compared with the average hourly rate for industry as a whole in 1951 was 1¼d. adverse to the building worker, in 1960, 6d., in 1962, 3d., and in 1963, 4d.
Within this general adverse effect, the movement of wages is still more for the skilled worker in the building industry, so it is not surprising that many building workers are apt to look askance at some of the things that the Government say. One of the most realistic and effective ways of making a big impression on the construction industry is steady building through the winter. In the debate on 17th March, my hon. Friend the Member for Leeds, West (Mr. C. Pannell) made reference to this fact. This is the key to success in the construction industry and also in the economy generally. Just as the Chancellor takes risks with the balance of trade, so he risks the weather. From 1955 to 1957 the Government had it easy. The figure for unemployed building workers varied only between 33,000 and 50,000 in January and February. But since 1959 the winter has become an important part of the lack of Government policy, because in 1959 over 100,000 building workers—7 per cent.—were unemployed in January and February. In 1960 the figure was just under 70,000; in 1961 it was the more normal figure of 50,000, but in 1962 it was back to 70,000, and last year it was over 250,000, or a fifth of the building industry labour force.
There is no Government policy to deal with this situation. It is absurd for the Chancellor of the Exchequer and the Chief Secretary to make no reference to this situation, because other countries manage very much better. In Sweden there is a 6 per cent. subsidy, which the Swedes find economic in the sense that they average out building between the summer and winter, thus avoiding excessive overtime in the summer and keeping the building industry steadily running throughout the year, so that all the ancillary industries which supply building materials and the transport for them are much better able to plan their production and are therefore more efficient.
We could have a subsidy for the labour employed in the winter, or we could have a subsidy for building houses

in January and February. Certainty there could be an elimination of Purchase Tax on all those articles which are required for winter building. The Government could subsidise forms of heating by arrangements made between the Government and the National Coal Board, the Central Electricity Generating Board and the Gas Council to provide heating at subsidised rates to building sites. There are many ways in which, if the Government applied their minds to it, they could provide a fiscal encouragement for the building industry. About the one positive thing they have done is to maintain the fuel oil tax, which has a strong disincentive effect on the cement industry.
Furthermore, the Government could not only insist on contract conditions to improve the welfare of workers on building sites; they could make minimum conditions of welfare implicit in the Factory Acts. They could level out the: respective building activity in the South and the North by area discrimination, by using a payroll tax or something of that sort in respect of building in certain areas.
The Upshot of ignoring these problems has been that the Minister of Public Building and Works and his friends have put nearly all their weight on a gimmick—the increase in industrialised building.
I went to quote one sentence in a N.E.D.C. Report:
In relation to the total amount of building undertaken, however, this type of building will still be small by 1966.
One of the difficulties both in the building industry and in planning the economy as a whole is the in Adequacy of industrial statistics. If the N.E.D.C. has done nothing else it has drawn attention time and time again in its last three Reports to the inadequacy of the means by which the Government can form their judgment. The Chancellor said that he was not ready to make firm proposals for revising Exchequer accounts. I would have preferred him to say that he was taking seriously the question of the need for much better statistics throughout industry.
I want to refer to some inadequacies of the construction industry. The last


Report on the Growth of the Economy says:
Measures of productivity in the construction industry must be used with great care.
On another page it refers to,
Inadequate data with which to compare costs of building by traditional and industrial methods
and again:
Statistics of employment and of output are not easy to collect and there are difficulties in adjusting for price changes.
But I want particularly to refer to two special comments in the N.E.D.C. Report on the building industry which go to the heart of the matter. It says:
If demand and capacity in the industry are to be reasonably balanced a much extended statistical coverage is needed … The Ministry of Public Building and Works has introduced new arrangements. This additional information will be available during 1964.
The comment might there be made that if it is to be available only in 1964 the Government must be doing a great deal of gambling in the construction industry. When the right hon. Gentleman explains so boldly how social building and private building is being related to the general economic position he must have some advance information from the Ministry of Public Building and Works which the general public has not had.
Having said that, the N.E.D.C. Report adds:
A detailed analysis of the output of the industry by type and size of project is also required.
Output data should be available regionally. More should be known about the composition of the labour force and about the demands which different types of construction make upon resources. I doubt very much whether all this data is being prepared by the Ministry of Public Building and Works and will be available during 1964.
The Chancellor was quite willing to spend £22,000 last year on a survey of gambling clubs in order to decide not to tax them. I wish he would devote a larger sum of money to putting this statistical data in hand. One of the bases of the Government's appeal to the country in the face of the charge that there has not been 12 years of drift is that they have abandoned stop-go, but if one looks at the N.E.D.C. Reports one realises that both industry and the

N.E.D.C. are not at all sure that the Government will abandon stop-go. I refer here to page 21 of the N.E.D.C. Report on the Construction Industry which refers specifically to the stop-go regulator, and which says:
appropriate conditions for and methods of short-term regulation should be examined. If measures have to be used it is important that they should cause the least possible harm. One important requirement is for greatly improved statistical information giving the necessary detail about future developments, so that the nature of the expected shortages and the points at which action may be required can be defined: for example, the regions in which overload is likely, the types of skill or the sort of materials which will be short. Unless the regulator were to be based on much fuller information than has been available in the past, it could have its major effect just at a time when the pressure had already eased.
This shows that the N.E.D.C. does not rule out the imposition of a stop-go regulator, and it is clear that it knows that the Government have not got adequate statistical data to apply such a regulator sensibly.
I now turn to one aspect of the industry which could be important in the economy and upon the Budget has no effect at all—the export-import activity of the building industry and its effect on the balance of payments. The Chancellor said that
the key to all our success is a vigorous increase of exports".—[OFFICIAL REPORT, 14th April, 1964; Vol. 693, c. 262.]
Almost every aspect of the building and construction industry can be said to be a drag on our balance of payments. There has been a steady decline in the value of construction work done overseas. In 1961, £135 million worth was completed; in 1962 the figure was £113 million, and in 1963 it was £111 million.
The Chancellor spoke about an export increase of 10 per cent. being satisfactory and imports of the order of 13 per cent. being tolerable because many of them were the sort of imports which were semi-manufactures that could be manufactured and would later become exports, but that is not so in the building industry. The imports the building industry brings in are to make up for the defects in our own production. The value of overseas contracts is that they act as a spearhead for other industry to about the value of half the figures I have given.
If we look at the different types of building materials exported we find a


serious deterioration. For example, in cement there was a decline from 640,000 tons in 1961 to 261,000 tons in 1963, and the decline is expected to go still further. Imports ran steadily at 100,000 tons between 1962 and the present date and are expected to continue at that rate. We have, therefore, a net deficiency in cement. In glass for building, exports have fluctuated from 86 million sq. ft. in 1961 to 93 million in the next year, back to 85 million in 1963 and they are expected to go to 95 million sq. ft. this year. But imports have risen substantially from 28 million in 1961, 40 million in 1963 and 41 million expected in 1964.
Timber imports have always been a problem. The Minister of Public Building and Works is increasing the amount of imports from Canada of particular types of timber-frame for buildings so that the import of about £60 million worth for building is expected to rise by 1966 to £70 million, or more. If we look at the total figures for the export of building materials we find the same decline. The total for all building materials was £70 million worth each year in 1954 to 1957, but was rather less than £64 million in 1962.
In the export of building fitments and components there is the same sort of situation. The peak was in 1956 to 1958. It has dropped every year since and was £40 million last year. The building industry is not only not making an export effort comparable with what it has done in the past, but it does not bridge the material shortages from time to time in imports. If the right hon. Gentleman brushes that aside, I refer to the Cubitt Index of Construction Costs, which has just come to hand, which says:
The high level of economic activity will produce price increases as shortages of materials are more keenly felt.
Both on the balance of trade and the cost of efficiency in production the Budget has no effect at all on the building industry. When right hon. Members opposite go around the country pretending that if more attention were paid to industrialised building the problem would be solved, they should realise that that is a superficial approach. It is a problem which needs to be seriously considered or it will have the effect, as the N.E.D.C. Report says, of dragging

back the economy to a situation which none of us wants.

5.24 p.m.

Sir Alexander Spearman: We have had a very interesting speech from the hon. Member for Bishop Auckland (Mr. Boyden) on an industry which, I agree, is one of the key industries and of which he clearly has a great deal of knowledge. I hope that my right hon. Friend the Minister of Public Building and Works will study his speech very carefully. I would rather comment on the earlier speeches made from the Front Bench opposite, which were more concerned with broader economic issues.
On the opening day of the debate on the Budget, the Leader of the Opposition gave us a great many figures. We all know that the right hon. Gentleman is very good at figures. I remember that when he first came into this House a friend of mine who had worked with him during the war described him as, "The chap who was a wizard with a slide rule". The right hon. Gentleman knows, I am sure that statistics can be used, according to the date when they are brought in, either to prove one case or the opposite.
My right hon. Friend the Chief Secretary has, I think, very conclusively demolished the complaint of the Leader of the Opposition about "12 drifting years". I add only one figure. Between 1950 ark 1952 industrial production went up by half of 1 per cent. Between 1952 and 1964 it went up by 46 per cent. I am not putting these figures forward in criticism of the Labour Government, nor in support of this Government, but merely because they make a nonsense of saying that those were "drifting years".
The right hon. Gentleman also talked about a "painfully contrived pre-election boom", when he was talking about 1959. If he looks at the actual figures, he will find that it was not in 1959 that there was an exceptional increase in production, but in 1960—after the General Election�žwhen we had a record increase in production.
The right hon. Gentleman talked a lot about a huge increase in rents. Of course, there has been a big increase in rents; I accept his figure of 172½ per


cent., but that was from 1939. We may differ about rent control, but so far as I know, hon. Members opposite entirely agree that there must be some rise in rents from 1939. If they propose to put rents back to the 1939 level, I hope that they will say so. It will be a terrible warning to those people, many of whom are very poor, who own a house or two and who will be quite unable, on 1939 rents, to do repairs. If we look at the turnover article in The Times of 20th August last, we see that weekly earnings have gone up since 1939 four-and-a-half times and that home rents have gone up by a little over one-and-a-half times. I think that that gives a fairer picture.
The right hon. Gentleman talked about dividends going up. Of course, dividends have gone up, but what he did not add was that owing to the great increase in savings it was possible for companies to distribute a larger amount because they could raise money on the market and, because they could raise money on the market, those dividends are paid on a far larger capital. The fact is that the share of the percentage of profits compared with total wages and salaries was 32 per cent. in 1951 and, today, is under 23 per cent.

Mr. E. Fernyhough: Are those figures before taxation, or after taxation?

Sir A. Spearman: The figure I have given is the percentage of total gross profits to total earnings. It is enormously lower today than in 1951. Since 1950, profits have gone up by 61 per cent. and wages and salaries have gone up by 101 per cent.
I come to the hon. Member for Cardiff, South-East (Mr. Callaghan). He said that the fact that the Chancellor had to slow down consumption today was a reflection on 12 years of Conservative Government. I should have thought, on the contrary, that it was an indication of the vigour of the economy. Suppose we had, as we did have under Conservative and Socialist Governments before the war, 1 million or 2 million unemployed. There would have been no need to tone down consumption demand. We would have had falling wages and falling prices.
Most hon. Members opposite who have spoken have laid great emphasis on the unfairness of the Budget. The hon. Member for Cardiff, South-East said that the increases in taxation were unfair. The right hon. Member for Battersea, North (Mr. Jay) was more specific; he said that we should definitely shift the burden away from the consumer on to company profits. We heard much about that from the hon. Member for Sowerby (Mr. Houghton) today. My right hon. Friend the Chief Secretary made it very clear today that shifting the burden from the consumer on to company profits would have no immediate effect on spending. It would not affect the situation today in any way. Much of its later effect would be not on spending, but on investment.
Hon. Members opposite are still living in the days of Gladstonian finance, when what the Chancellor was concerned with was how to raise enough revenue for his expenditure. Today, we have got far beyond that. The whole purpose of the Budget is to regulate spending so that it is in balance with production. I can well imagine that the hon. Member for Cardiff, South-East might produce a Budget which placed heavy taxes on capital and released taxes on the consumer. In the short run, that Budget would be thought by many to be very fair, but if those taxes did not stop inflation—and they would not—if they discouraged savings and enterprise—and they would—and, if in consequence, we were all a great deal poorer, whatever our incomes then, I do not think that, in the long run, it would be thought to be a very fair Budget.
The real test of the Budget is how it contributes to the strength of the £, to stability of prices here, and to growth. On balance of payments, the Leader of the Opposition said that what was wanted was an industrial policy which would expand industries that would save imports. In the short run, that is quite irrelevant; it could not affect the situation. In the long run, it is very doubtful whether it would be wise to divert our limited resources away from making things we make best to making things we do not make so well and which would cost us more.
The most disturbing thing I have heard from hon. Members opposite in these debates on the Budget is the reiterated talk of import controls. The right hon.


Member for Battersea, North went so far as to attack the Government for premature liberalisation. Import controls are like a very strong drug which in an emergency may be necessary but can last for only a short time and tremendously weakens the user. Moreover, if imports are reduced, unless demand is also reduced there is more inflation. If demand is reduced, there is no need for import controls.

Mr. Fernyhough: I am interested in this argument. Would the hon. Gentleman apply it to British agriculture? Would he allow free imports of Argentine beef, Danish bacon, Irish butter, and so on? Would he not have any quotas?

Sir A. Spearman: I draw a distinction between imports controls and antidumping legislation. It is right to prevent dumping, which I interpret to mean sending goods here at far below the cost of production, when one knows that it will not continue.

Mr. Charles Loughlin: This really is not true, because the British farming community at present, in addition to arguing against any form of dumping, is arguing—the hon. Gentleman and his hon. Friends support the argument—for a restriction on imports of foodstuffs from other countries. Does the hon. Gentleman accept that policy?

Sir A. Spearman: Perhaps I will have the opportunity of arguing that in an agricultural debate.
I turn to the broader issue. I should have thought that from a political as well as from an economic point of view hon. Members opposite would have been more internationally minded. I should have thought that they would have been concentrating more on the expansion of world trade. I am sure that we will be more secure in every way if we can make a big contribution to broadening the whole of world trade. It is far better for us to have a smaller slice of a very large cake than to have a large slice of a small cake.
When I first entered the House of Commons a very remarkable trade union leader sat on the benches opposite. I do not think that anyone here this afternoon was in the House

of Commons with him. I refer to W. J. Brown. Be illustrated the evils of protectionism by this story. It is a story, if I remember it rightly, of two donkeys who, for a time, had shared a field quite happily and comfortably. After a while, one of them thought that he was not getting a fair share. He believed in cutting off his nose to spite his face, so he kicked up a huge ditch right across the field. The other donkey was so angry that he kicked up another ditch. Thy first one kicked up another, and so it went on. Finally, the whole field was kicked up, and both the donkeys died of starvation. [HON. MEMBERS: "What happened to W. J. Brown?"]
I believe that the question of protectionism cuts right across parties. I do not claim that all the angels are on this side of the Committee. I can think of hon. Members opposite who share these views. I put it in this way. There are those who, like an old-fashioned general, believe in defence, in piling up one protective measure after another to try to ensure one's position. There are others of is who, like a modern general, believe in attack and adapting oneself to changing circumstances. I believe that there are many hon. Members opposite who take that view. The encouraging thing is that it is the leaders on this side of the Committee who take the progressive view. The depressing thing is that it is the leaders of the Labour Party who, with certain exceptions, take the reactionary, old-fashioned, view.
The strength of the £ depends on our costs here. If we keep our costs down, that is all right. If there is speculation against the £, if there is a bout of heavy stocking which puts a drain on the £, that does not matter, because we have reserves. That is what reserves are for. If a motorist is going for a long drive in a motor car and he has seven spare tins of petrol, it does not matter if his tank runs dry. However, if there is a leak in the tank, no number of tins will remedy that.
That is why stable prices here are the basis of security. It is generally agreed on both sides of the Committee that stable prices here means that wages do not rise more than productivity. The trade unions say that, if there is to be


restraint on wages, there must be restraint on profits. That sounds fair enough, but how is it to be done? Whenever profits are being checked, employment falls, because manufacturers then drop the least profitable part of their activities. That happened in 1951, 1955, 1958, 1960 and 1962. In all those years, under Socialist and Conservative Governments, there was a check to profits and a check to employment. Attacking profits may well be good electioneering, but I am sure that it is bad economics.
I have no doubt that some hon. Members opposite will disagree with this, but I maintain that there is no harm in high profits. They enable a high rate of employment, high wages and a high rate of investment. The thing that does the damage is easy profits. It is worth remembering the words of Henry Ford the First, who said:
I make bigger profits than any other car manufacturer, and what is wrong with that? The wages I pay are higher than anyone else". I employ more men than anyone else and I sell my cars cheaper than anyone else.
I suggest that if hon. Members opposite attack easy rather than high profits they will be doing more of a service. If there is more competition in a free country employers cannot simply increase their prices because they would not be able to sell their goods. This may sound harsh, but I would go so far as to say that the best way to maintain and raise the high standard of living is to have a high rate of profits for efficient industrialists and a high rate of bankruptcies for inefficient industrialists.
The Chancellor cannot fix wages or profits, but he can create the right amount of competition by seeing that there is the right amount of spare capacity. Professor Paish, in the Statist, published on 20th February, showed that in 1951 there was no spare capacity at all, that there were sharply rising prices, a balance of payments crisis and falling output. In 1955, there was, again, very little spare capacity and we had two years of stagnation.
In 1961, there was, again, very little spare capacity, but action was taken earlier and we did not have stagnation. However, we had 18 months of only half normal growth. It is all rather like an

illness. If the dose is taken—the dose being the re-establishment of spare capacity—at an early stage the dose can be very mild indeed. If the dose is taken late it will have to be severe. If the dose is not prescribed at all there must be a disastrous operation.
This is the first time that any Chancellor has taken steps to maintain spare capacity before we have started dangerously running it down, and credit is due to my right hon. Friend for doing this. If he has taken enough consumption off the market, growth can continue and investment need not be affected. That is all the more important because the investment industries are largely concentrated in the North, where there is more unemployment, and the consumption industries are largely concentrated in the South where there is greater pressure on labour

Mr. C. Pannell: Nonsense.

Sir A. Spearman: I do not understand the hon. Gentleman. He must appreciate that there are more consumption industries in the South than in the North, and that in the South there is a greater demand for labour.

Mr. Pannell: Thirty per cent. of the whole engineering industry is housed in London and the Home Counties. The hon. Member appears to be Victorian in his geography. If he looks at the statistics more closely he will find that industries in the South vie for labour more than in any other part of the country.

Sir A. Spearman: That is precisely what I am saying. I do not understand why the hon. Gentleman intervened. I was pointing out that if the Chancellor has not cut down consumption enough, further checks will have to be made the crucial question is whether £100 million will be enough.
Expansion is at present running at about 6 per cent.—what the Economic Report describes as the underlying rate of growth on productive potential—in other words, the amount of potential growth, apart from taking up reserves is really running at about 3½ per cent. to 4 per cent. Meanwhile, consumption is running at about £20,000 million. It is clear, therefore, that if we are to get through this period without having a bout of stop-and-go we must spend between £200 million and £300 million


less than we are spending. Clearly, only the Chancellor is in a position to judge. Certainly, those of us with no official information are not in a position to do so.
I can say with confidence that, if it is to be enough, then there must be more savings. I hope that my right hon. Friend will do everything he can to promote savings and I only hope that his estimates will not be distorted by any threats on the part of the party opposite to tax savings. My right hon. Friend must also keep a firm hand on Government expenditure. I believe that we can and should carry out the proposals in the recent White Paper for increased expenditure on education, health, roads, benefits and pensions, but we cannot afford expenditure on prestige projects or bolstering up declining or inefficient industries. I realise that this is not our immediate concern today, but I hope that the Government will find a way of altering the system of benefits and pensions so that those in need get more, and those who do not need them get less.

Mr. Bence: Is the hon. Gentleman suggesting that we should reduce our expenditure on being an independent nuclear deterrent Power, which we are endeavouring to remain so as, apparently, to have a place at the top table? Is he suggesting that that is not a prestige product?

Sir A. Spearman: That might be a more appropriate question in a defence debate. There are many other examples of prestige projects. One, for instance, might be the assistance given by the Government to the Cunard Line and I am doubtful whether it is wise to start a Channel tunnel. There are many others to which I would object, whichever Government carried them out.
It is often said that only our balance of payments difficulties prevent our growth. That is a most dangerous fallacy. If other countries have rates of inflation high enough, we will not run into any balance of payments difficulties, but we will still have inflation. Inflation is an evil in itself. It is the harshest form of taxation on those least able to bear it and it certainly checks growth. As I have tried to show, if measures to prevent inflation are taken

in time, they do not check growth. It is only whet they are left too late.
Under conditions of inflation that growth is severely checked, because we get inefficiency, waste and the wrong sort of investment; employers tend to make investments which will give the maximum output per unit of capital instead of the maximum per unit of labour. In cases of extreme excess demand any machinery and any labour will be used. We saw that during the war, when we could always squeeze a little more production —although the cost was prodigious. In such conditions prices soar, money incomes rise much faster than production and there is galloping inflation.
In a free country, there is no substitute for more competition far dealing with inflation. That means having the right amount of spare capacity. To judge the right amount of spare capacity and how to keep it is about the most difficult and important job that the Chancellor has to do.

5.50 p.m.

Mr. William Hamilton: The hon. Member for Scarborough and Whitby (Sir A. Spearman) seems to have aligned himself with the right hon. Member for Wolverhampton, South-West (Mr. Powell). He believes in virtually uncontrolled capitalism and, particularly, uncontrolled and very high profits.
This beings us to one of the funamental problems which we face as to how to achieve an incomes policy. Whatever may be the difficulties of getting at profits, this problem has to be tackled if we are to get the workers of the county agreed on any kind of incomes policy. How it is done is a matter for the mechanism within the Treasury, but it must be tackled, and the kind of expression of opinion made by the hon. Member contributes nothing to the solution of this problem.
I pay a tribute to my hon. Friend the Member for Sowerby (Mr. Houghton) for what I thought was one of the most brilliant speeches in the debate. He should have seen the terrified faces on the other side of the Committee when he stated what the Labour Government would do. We could see them working out the mental sums to see how he would catch them and their friends. It was a very interesting observation.
When we had the Gospel according to St. John from the Treasury Bench, it occurred to me that my hon. Friend the Member for Sowerby had made a valid point in his conclusion. If we have all these wonderful things, why do the public opinion polls show the Labour Party with a lead of 10 per cent.? Why are the Government refusing, and why will they refuse until October, to hold the by-elections which are pending? Why do not they hold the Rutherglen by-election where the Tories have a majority of just over 1,000? If things are so wonderful, why are they not prepared to tell people about the wonderful conditions which they have had in the last 12 years and to see what happens?
The right hon. Gentleman talked about the old-age pensioners having a wonderful time. I recollect seeing a Tory poster in London the other day stating, "Pensions doubled in the last 12 years." Some politically-minded person for the sake of accuracy had deleted the letters "Dou" at the beginning of the word "doubled". This is what the pensioners think about what the Government have done for them.
When he referred to a suggestion by one of my right hon. Friends that the £100 million could have been raised from Profits Tax, he charged my right hon. Friend with being impracticable because of the time factor. He said that such a tax would take a long time to bear fruit. But almost in the next breath he admitted that the capital gains tax which his right hon. Friend introduced will bring no return at all for three years—and yet the point of introducing it was to try to induce the trade unions to accept an incomes policy. He cannot condemn our proposal about Profits Tax on the ground that it takes a long time to bear fruit and at the same time defend his capital gains tax if it suffers from the same time factor defect.

Mr. Boyd-Carpenter: I apologise if I left the hon. Gentleman under a misunderstanding. The three years applies to gains from transactions in land. As I made clear at the time, for transactions in stocks the period is six months. I am sorry if I misled the hon. Member, but I thought that I had made it clear.

Mr. Hamilton: The right hon. Gentleman made it painfully clear that this was a gimmick to try to induce the trade unions to accept an incomes policy by window dressing and by pulling the wool over their eyes. This does not work.
The right hon. Gentleman talked about many things, including National Health Service charges. These are simply a transfer payment, and if we get rid of them it does not mean increasing taxation. It means simply shifting the burden from one set of shoulders to another. We say that by getting rid of the charges we take them from the shoulders of the chronic sick and the old and put them on the shoulders of people better able to bear the burden. Of itself, it does not involve an increase in taxation.
I was asked what we would do about a wealth tax. Let me make my position clear. When we get into power in October I shall press my right hon. Friends to impose a wealth tax. There is no beating about the bush as far as I am concerned. That is what I want, and that is what I think and hope we shall do. I hope that that answer is quite clear. It is much more specific than ever right hon. Gentlemen opposite were when the Labour Government were in power in 1945ߝ51. I recall Lord Eccles, as he is now, saying that he could save £600 million in public expenditure. He and his right hon. Friends were asked to tell us where, but the only answer we ever had was from Mr. Oliver Lyttelton, as he was then, who said that they would cut technical college building. This was the only specific idea we heard from them. In fact, public expenditure was not cut. and we never had answers to the questions which we asked—nor will they have answers to the questions which they are asking. It is like asking a Labour Government what Budget they will introduce in 1965. They will have to wait and see.
I was asleep for most of the Budget speech, and when I awoke and read it, I was glad that I had been to sleep, because it was an exercise in what I would describe as intelligent guesswork. I do not know whether the right hon. Gentleman was right or wrong, and nor does anybody else. He hopes that he is right. All the advice which he


received was for a cut of a higher figure, of £200 million or £300 million. Does anyone seriously doubt that he was influenced by the prospects of an October election? Does anyone imagine that, but for that, the right hon. Gentleman would have restricted his cut to £100 million?
The fact is that the Tory electoral timetable was painfully and dramatically upset by de Gaulle, Profumo and a prostate gland. This is what upset the timetable, and, typically, the Tory Party turned to the boys of Eton to be rescued. Whether they won the battle of Waterloo, at least they might retrieve Orpington. So we had white papers produced like green stamps on all conceivable kinds of things, and the theme was modernisation and planning. The Prime Minister, in his elegant way, galvanised the British people with "Neddy, Steady, Go". This was his contribution to getting the British economy going.
The British people, sceptical of the sudden conversion of the Tory Party, showed their incredulity by kicking the collective Tory backside in Luton, in the Greater London Council election and in many other parts of the country, including Lancashire and Staffordshire. In the face of what the right hon. Gentleman said this afternoon and what will be produced over the next six months, why are the British people so disillusioned with the Tory Government? No one can pretend that this disillusionment does not exist. We all travel up and down the country and have seen it, in every meeting and in every club; this disillusionment is there.
There are several reasons for it, many given by the hon. Member for Cheadle (Mr. Shepherd) last Thursday. He talked about the class structure of Britain. Britain reeks of the class structure. The unfairness of the tax system has been mentioned. There is a lack of dynamism in our society. He talked about a property-ridden society. How very, very true. This dry rot and woodworm in British society cannot be cured by a coat of high-gloss paint. Fundamental defects of this kind must be removed if we are to advance under any Government.
Other reasons could be drawn from the mismanagement of our affairs. There

is the recent example of the Ferranti case. If the train robbers got 30 years for stealing £2½ million, what would Ferranti get? There was the £3 million spent on one house in Downing Street, after an original estimate of about £750,000.
The right hon. Gentleman spoke of the great Tory record in housing. In Scotland, over one-quarter of our houses have no fixed bath. One in every five of our houses is without a hot water supply. One in five or our houses is more than 100 years old. Half of our houses are over 50 years old. The annual rate of replacement of these houses is 12,000 a year. At this rate, it will take Scotland 64 years to get rid of all the houses over 50 years old, and by that time we shall have another lot over 50 years old. This is the kind of thing which is plaguing the people, but it is the kind of thing which the right hon. Gentleman in his Budget never attempted to sort out. There is little doubt that local authorities are hamstrung by the financial set-up of local government in tackling their problems.
One right hon. Member opposite waxed eloquent today about how well our old people are doing. It really makes my blood boil when I hear that sort of talk. The way we treat our old people today is a massive indictment of our society. Yesterday morning, I was in the house of a man who is 89 years of age and very nearly blind. He did not know who I was except by my voice. He was sitting by the fire, smoking his pipe, and asking me what I was going to do about his "baccy". The Chancellor has put 5d. an ounce on tobacco, yet this is the only pleasure which that old man has today, sitting by his fire and smoking his pipe. The Chancellor tells us that Britain's economic future depends on taking another 5d. a week from that old man. It is completely indefensible, and I am certain that this side of the Committee will vote against the proposal when the Finance Bill is presented. I very much hope that it will, anyway.
On has to put these facts—the 1d. on the pensioner's pint of beer, the 3d. on his packet of cigarettes and the ½d. which went on his pint of milk a few months ago—side by side with a former Chancellor's pronouncement that a man on £5,000 a year could not educate his


children and the present Chancellor's statement that the Surtax concession was a long-overdue measure of social justice. When one has that kind of cleavage in society and that sort of difference in treatment between the very wealthy and the poorest sections of our community, one cannot talk about or expect the development of one nation solidly resolved to pull together for the national interest.
In the present social climate, the Chancellor and the Government have the effrontery—I can call it nothing else—to appeal for an incomes policy. The man who talked so emotionally about the difficulties of the man on £5,000 a year, and refused the nurses, the teachers, the probation officers and others a fairly negotiated and reasonable salary increase, and the present Chancellor, who now calls for an incomes policy, can expect no response whatever. There will be no response so long as the Government refuse, as they are doing, to tackle prices, rents, profits, dividends, capital gains, the expense account racket and the rest.
A word about prices. In his Budget, the Chancellor spoke about the National Coal Board offering a reduction. It is interesting to see how a Tory Government, while denigrating the nationalised industries, always turn to them for an example to give to private industry. This was the only example which the Chancellor could give in his Budget speech of an industry voluntarily saying that it would cut prices. The Coal Board is to cut the price of its coking coal to the steel industry. Has the right hon. Gentleman approached the steel industry to get an undertaking that its prices will reflect the reduction in its coal prices? If he has, what has been the response? It would be very interesting to know. Has he approached other privately controlled industries to ask them whether, in the national interest, they will seek to reduce their prices in order to make a contribution to the national interest? If he has, what has been the response?
All the signs are that the contrary is happening. The Monthly Digest of Statistics shows that, since 1962, food prices have gone up by 6 per cent., meat and bacon have gone up by 7 per cent., and butter, margarine, lard and so on

have gone up by 12 per cent. Sugar preserves and confectionery, the price of which the previous Chancellor raised by putting on a tax, have all gone up by 19 per cent, since January, 1962. Bread, biscuits, cake, and so on, have gone up by 7 per cent. All these increases have occurred in 15 months.
It is no good the Chancellor talking about an incomes policy if he does not attempt to tackle private industry which is indiscriminately and quite unscrupulously putting up prices in this way. He has given the spiral another upward turn in his Budget. It is not the first time that this Government have done it. I have referred to the tax on sweets and confectionery. There are the motor fuel and other taxes, all of which put up the cost of living for ordinary people.
In his speech the other day, the Secretary of State for Industry and Trade—no doubt, he will do the same in our proceedings this week—tried to convince the country that his Resale Prices Bill is designed to tackle prices, and I think that the hon. Member for Scarborough and Whitby implied the same point in his speech, that it would induce competition and help to bring prices down. This also is a deliberate attempt to try to convince the organised workers that the Government are tackling prices. But, of course, they have no intention of tackling the monopolies and the restrictive practices within them. They are quite happy to tackle the small man, and, in any event, the Resale Prices Bill, in my view, will of itself have only a marginal effect. While they do not tackle the bigger boys, the monopolists, the unions will see quite clearly how insincere they are.
A small but significant example of the inequity tolerated by the present Government which makes an incomes policy such an unattainable objective for them is to be found in something which I have been raising for two years now, namely, the untaxed income from certain toll duties. Since March, 1962, I have been trying to eliminate this scandal. I can tell the right hon. Gentleman that I have had support from hon. Members on his own Front Bench in what I am doing.
In March, 1962, one of them, who is now Parliamentary Secretary to the Ministry of Aviation, initiated a debate


in the House in which he showed that a bridge in his constituency owned by the Earl of Abingdon was yielding a tax-free income estimated by the hon. Gentleman, not by me, at £6,000 a year. This has been going on since the eighteenth century. The Swynford Bridge in Berkshire was built in 1767. The Earl of Abingdon and his family have had it for 200 years. They have had the tax-free income from it all this time. It is also free of rates and free of death duty, if it attracts that. This was achieved by a private Act.
A more profitable bridge is the Selby toll bridge in Yorkshire, which dates from 1791. It is owned by the Selby Bridge Company. I have discovered from the Library—and I must pay tribute to the research staff of the Library: although they have not obtained for me all the information that I wanted, I hope that they will do so in due course: they have been very helpful—that the President of the Selby Bridge Company is Sir Clive Milnes-Coates, Bart. I do not suppose that he has a Labour Party ticket in his pocket. The Vice-President is the Rt. Hon. The Earl of Halifax—again not, I think, an avid supporter of the Labour Party. The hon. Member for Howden (Mr. Bryan), a prominent official within the higher echelons of the Tory Party, estimated in the debate in March, 1962, that the income from this bridge is £70,000 a year—Income Tax free, Profits Tax free, everything. Not a penny is paid on it.
Would the Chancellor of the Exchequer care to estimate what taxable gross income would be required to give a net income of £70,000 a year? This bridge is owned by Lord Halifax, a Tory Peer, among others. His son sits on the Government Front Bench and, no doubt, advocates 3½ per cent. wage increases for the workers. Can he ask his "dad" to hand this bridge over or, at least, as a patriotic gesture and as his contribution to an incomes policy.—

Mr. C. Pannell: It is his elder brother.

Mr. Hamilton: I am not concerned what the relationship is. He is a relation, anyhow. Can the right hon. Gentleman, in the interests of the Exchequer and of achieving an incomes policy, ask this relation whether he will voluntarily consent to having that income taxed?
I must get these bridges on the record, because I was deliberately kept out of the debate last Friday by some filibustering on the benches opposite. There is another bridge—

Mr. Diamond: I want to be clear about what my hon. Friend is saying. Is he saying that, as a result of the unfortunate death of Lord Halifax, the sons have inherited something producing an income of £70,000 a year without paying death duty?

Mr. Hamilton: That is exactly what I am saying. I understand that the same applies to all these bridges.
In answer to a Question put by me last week, the Chief Secretary to the Treasury said that the remedying of this evil, this scandal, could be achieved only by a measure in the Finance Bill. I have taken advice, and I discovered that I cannot do it because it would involve increasing taxation. Therefore, it can be clone only by the Government. I ask the Chancellor whether he intends to include in the Finance Bill a Clause which will remedy this evil.
I wish to put the other bridges on record. About 1772, some local private individual was given authority to build the Aldwark Bridge in Yorkshire. The income from it is tax-free and duty-free. I have not been able to find the income from it or to obtain a census of the sort of traffic which uses it. It is owned by Yorkshire Farmers Ltd. I expect that the proprietors of this concern find this bridge more profitable than their farms.
There is a bridge between Berkshire and Oxfordshire, the Whitchurch Bridge, which is owned by the Whitchurch Bridge Toll Co. They got this wonderful bonanza in 1792. The Whitney Bridge, in Herefordshire, is owned by the Whitney Bridge Trust. They got theirs in 1780. They are not doing so badly.
When the Chancellor of the Exchequer or any of his right hon. Friends talk to me, my supporters or the workers whom I represent about an incomes policy, I say to him, "Start at Selby and then I will believe in what you are trying to do". For two years I have tabled Questions on this subject. We have had a policy from the Government of evasion, equivocation and inactivity precisely because their friends—the Earl of Abingdon, the Earl of Halifax and the others—own these


bridges. No doubt they are very great patriots, but they would probably use the expression used in the Bank Rate leak tribunal, "It may not be British, but it makes damned good sense to me."
I wish to return to the speech made by the President of the Board of Trade last week. He, too, had some very remarkable comments to make on an incomes policy. He chided my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) for choosing his own base. My hon. Friend's base was, I thought, reasonable—12 years of Tory Government. This seems to be an all-inclusive proposition. But, having chided my hon. Friend for doing that, the right hon. Gentleman chose to go back to 1938 to prove his point. He scolded him for basing his arguments about an incomes policy on one specific year.
I believe that the incomes policy problem is the crux of whether we solve our economic dilemma or not. It depends not only on the relationship between different forms of money income but on whether the people as a whole feel that the social and economic climate, which the Government can do a great deal to control and guide, is designed to ensure justice and equity for all sections of the community. The principal charge which we make against the Government is that they have singularly failed to engender that kind of feeling.
I should like to quote from those very famous articles in The Times by "A Conservative". This is what he, or she—I think that it was a he; it was a Conservative—had to say:
…the poverty line, wherever one chooses to draw it, moves upwards as the standard of life of the large majority rises. Harsh though the judgment may seem, it is in the relief of poverty that the biggest failures of Conservative policy in the last 12 years lie.
This is a fundamental truth. Of course, the poverty line rises as affluence rises, but it is there, nevertheless.
I wish to quote a letter to the Fife Herald, a local newspaper in my constituency, dated 18th March, 1964. It is a letter written by a Mrs. Maitland, the acting clothing specialist of the W.V.S. for Fife County. This is what she says:
May I, through the courtesy of your paper, once again make an appeal to your warm-

hearted readers? Our appeals in the past have always brought a most generous response, for which we are extremely grateful.
The need for children's good second-hand clothing is, at the present time, very acute in areas of heavy unemployment, and many families, particularly in the depressed mining areas of Fife, are in desperate need of clothing.
Also, as summer approaches, children from the bigger industrial cities will be arriving under the W.V.S. children's holiday scheme, to stay in private homes throughout the county. Most of these come from homes where there has been trouble of some sort—illness, unemployment, housing difficulties or desertion by parents. Whatever the trouble, money is short, and in such cases W.V.S. fit out the children so that they may unpack their few belongings with a little pride.
Dresses are plentiful at the present, but there is a great shortage of underclothing, pyjamas and shoes for boys and girls in the age group 5–12 years.
This is the affluent society that hon. and right hon. Members talk about.
I am not denying—it would be surprising if it were not the case—that standards of living are rising in view of scientific techniques, discoveries, and so on. It would be a criminal charge against the Government if that were not so. There are, however, millions—I say that advisedly—of people who are still in poverty. The letter which I have read bears out what I have been saying.
This is the indictment of the people today. Poverty does not mean only lack of financial resources, but, also, it can mean poverty of environment, poverty of educational opportunities and poverty of job opportunities. In far too many areas we are still suffering greatly from one or other of these forms of poverty. The Newsom Report drew attention to the lack of educational opportunities. I have called attention to the poverty of environmental services, housing and the rest. In many areas of Britain, capitalist greed and ruthless exploitation has left its deep scars in and around our great industrial areas—the slums, the slag heaps and the festering sores created and left by the system in which too many of the Government's supporters still believe. They are still there.
And so I come to another important issue which the Chancellor did not attempt to tackle, and which the Government have never attempted seriously to tackle: that is, the problem of regional development. It is true that the Government have produced, very belatedly, one


or two White Papers on the subject. Presumably, their claim is that, because they have produced these White Papers for Central Scotland, the South-East and elsewhere, there was no need for the Chancellor to mention the subject in his Budget speech.
I call the Government's attention, however, to their record, if they are satisfied with their record—and it seems to me that they rest upon it. Let me put one or two facts concerning Scotland. I was looking with interest last week at a Tory newspaper advertisement entitled "Straight talk on jobs". It said that
there are now about 2 million more jobs today than there were when the Conservatives took office in 1951.
I wonder whether that poster will be circulated in Scotland, because in Scotland the number of men at work in those 12 years—when, presumably, according to the Government, 2 million extra jobs had created—has decreased by 33,000 and the number of boys at work has decreased during those years by 600. If we take men and boys together, while there has been an increase in the rest of Great Britain by just over 1 million, there has been a decrease in Scotland of over 33,000. That is what we object to in the policies that the Government have put forward in the last few years. These are the harsh facts of failure which no Tory Government can gloss over.
What conceivable relevance has the Budget to those problems? If the problem is to get growth without inflation, the Chancellor himself has said that one of the main ways in which we can do this is to employ such resources as are now unemployed, which means the resources currently unemployed in Scotland, the North-East and elsewhere. We can get growth only by taking measures fully to employ the resources which are now unemployed in those areas. Nothing that the Government have done in the last 12 years has attempted to tackle that problem.
At a time when, certainly, Scotland and the other areas like it are calling and yearning for inspired, dynamic leadership, all they get is a soporific. That is what we had last Tuesday. As I said earlier, I do not know whether it will be the right solution to the problem that the right hon. Gentleman posed. I am certain that it will not relieve any

of the problems that we currently face in Scotland.
The only effects that the Government's Budget has produced are wide yawns and a sense of utter boredom and frustration. To quote another sentiment expressed by "A Conservative" in The Times
There come moments in the life of every party when it needs to wash off the last application of humbug and start afresh. For fundamentally any party depends for survival on clean hands and a good conscience. Such a moment has come for the Conservative Party.
I second those sentiments.

6.27 p.m.

Mr. William Clark: The hon. Member for Fife, West (Mr. W. Hamilton) was a little ungenerous in referring to the 2 million more people who are employed. I remind the hon. Member—it may be that this will have a salutary effect upon him—that but for the American loan which the Administration of his own party were responsible for securing between 1945 and 1951, on the assertion of his party's leaders this country would have had 1½ million unemployed. It is, therefore, a little unfair to denigrate the effects of Government policy in Scotland and the North-East.
In his speech last Tuesday, my right hon. Friend the Chancellor of the Exchequer gave many figures showing that the growth in the North-East and in Scotland is gaining momentum in the number of applications which are coming forward. When the hon. Member for Fife, East, says that there are 30,000 fewer jobs up there, it may be that some of the people have drifted South. One must accept this. It is, however, no use for any hon. Member opposite to say that there has been no achievement in the employment record over the past 12 years when we are employing 2 million more people. Whether the Opposition like it or not, this is a fact which cannot be refuted.
The Budget should not be discussed in isolation. In introducing it, my right hon. Friend the Chancellor referred to his measures of the previous year. The two years must be taken together, because it is ludicrous for any country, especially one of our magnitude, with a turnover of about £7,000 million a year, to talk merely from year to year of our


achievements. I would have thought that my right hon. Friend's last Budget in 1963 and this Budget should be taken together. The hon. Gentleman the Member for Sowerby (Mr. Houghton), in a very amusing and interesting speech, said about my right hon. Friend's Budget last year that in that he had been lucky. He accused my right hon. Friend of being lucky. I would much rather be on the lucky side than on the unlucky side.
Even if he has been lucky I would have thought one could have given credit to him for having taken up the slack in the economy since 1963. I do not think that anybody can deny this. There is a danger this year that we are overstretching ourselves. My right hon. Friend said in his Budget speech that it is a fine judgment how much one should take out of the consumer market. Whether it is a right or wrong judgment, as the Committee knows my right hon. Friend has taken out of it just about £100 million. This touch of the brake has, I think, come early enough to prove in time to be effective and right.
I was delighted that my right hon. Friend the Financial Secretary dealt last week with the question of indirect and direct taxation. I would have thought that in these circumstances any increase in taxation should be indirect, because it is much better, I think, to tax spending rather than to tax earnings, particularly when we want extra production. The Financial Secretary gave figures. For the benefit of right hon. and hon. Gentlemen opposite, I will give them again. In 1951–52, when the Government was composed of right hon. and hon. Members now sitting on the benches opposite, direct taxation took 41·8 per cent. This year, with my right hon. Friend's proposals about beer and tobacco, it will be 41·2 per cent. I should have thought that there was no argument here that we are switching the burden of taxation from direct to indirect.
It is less today than it was in 1951–52, but we have to look at it in the light of the whole financial structure of the country as to what may happen with the question of stockpiling. We know that stockpiling is going on at present. It

has been going on, roughly, from the autumn of 1963 and it is getting into its stride. If there were no political uncertainty we would have sufficient reserves to meet any current payments deficit because of stockpiling.
I would remind the Committee that we have gold and dollar reserves of roughly £1,000 million, I.M.F. drawings of £350 million and a standby credit of £520 million, dollar securities worth £500 million, swap agreements of a value of £180 million, and under the Basle Agreement £325 million, and this is extremely important to the economy of the country. The total of reserves is a total of something just short of £3,000 million. If there were no political uncertainty we could quite easily carry any deficit in the autumn.
But we must remember this about swap agreements, and I should like to see my right hon. Friend the Chancellor look into this a little more closely. I know that he is looking into the problem, but I should like him to look closely into these agreements, whether dollar or mark or franc agreements, to see whether they could be extended more and more, because there is no question about it that if we are to get an increase in real turnover, which was what my hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) was talking about, and an increase of the international cake, we shall get it only by increasing international liquidity. When we talk about international liquidity, and increasing it, we must always remember that no matter what swap agreement we may have the basic fact is that the home economy must be sound, otherwise none of these agreements will eventually hold water.
Here I would have thought that political uncertainty in this country, and particularly the very threat of nationalisation, veiled though it may be—and I am not arguing its merits or demerits—will have some effect on our international liquidity, because it seems to be ludicrous that throughout the world under-developed countries are crying out for goods while our country, simply because of lack of credit, cannot supply them. I should have thought that through the World Bank, or whatever organisation might be selected, there could be drawn up a code of conduct as far as the under-developed countries are concerned, because anybody


wanting to invest, whether a private individual or a Government, must have some security of tenure for capital.
At home, we cannot opt out of the basic rule of economics. The basic rule of economics, I would have thought, is that we get only what we work for. This applies throughout industry. Another one is that we must not overpay ourselves. One other thing, we must remember that to this country our export position is vital.
In this debate we have heard a lot about percentages and how badly we are placed in the international league, and so on, but every speaker who says that we are at the bottom of the international economic league always omits to say that we have had full employment the whole time. This is one fact which belies some of the suggestions one gets out of a straight comparison of our export position. Various percentages, have been cited, but the basic fact is that our exports in 1951 were running at the rate of £2,700 million a year.
I take 1951 as presumably the base year. I am not trying to make any political capital out of this. Today, they are running at something like £4,000 million a year. It does not matter which percentage we take: it always depends on the base figure from which we work.

Mr. Diamond: Would the hon. Member extend his figures a little by explaining what share of the total world market Britain had in 1951 when the Labour Government ceased to be in office?

Mr. Clark: Of course I will explain, but the hon. Member does not expect me to give the figures off the cuff.
The reason we have lost our percentage of world trade—we must accept this—is that while between 1945 and 1951 Germany and Japan, which were only just becoming really industrialised after the devastation of the last war, and this country then had an opportunity, we lost a golden opportunity, between 1945 and 1951, of capturing export markets previously held by the Japanese and the Germans—[HON. MEMBERS: "Rubbish."]
What we have to remember is that we have this year, as we have had in previous years, deficit financing both

above and below the line. Quite obviously, if we are not going to get rampant indation our savings have got to exceed this deficit. Figures have already been given. In 1951 we saved roughly £100 million a year. Today, we are saving £1,900 million—no mean achievement. I do not think that this is a picture of a poverty-striken nation—a nation which is saving £1,900 million a year.
My right hon. Friend, in his Budget, has paid some attention to saving. I know that ray hon. Friend the Economic Secretary and I are at one in this, in that we share a common interest in saving by as many people as possible I am glad that my right hon. Friend the Chancellor has accepted a contractual saving bonus. Presumably, it will be done through the National Savings Movement. I should like my right hon. Friend to lay a little attention to the teen-age population, which it has been estimated, n an extremely well written article in the Financial Times, some months ago, has a disposable income, after paying expenses, and so on, of about £1,000 million per year.
Here is a golden opportunity for the National Savings Movement. Let it attract some of this money, perhaps by the issue of bonds—"Beatle Bonds", if hon. Members like; call them what you will. We could issue "Beatle Bonds", and those who were 17 years old could take one or two out and keep them for Jive or 10 years. What we must do is instil into our teen-agers the importance of saving. The extra savings would go into the National Savings Movement.
Here I must utter a word of caution. The National Debt is increasing. Last year, it grew by about £400 million. Thought should be given to the possibility of beginning to reduce it. This is not the time and place to suggest in detail how that might be done, but I should have thought that the one capital tax that e had was the Estate Duty and that some of the revenue from it could have been allocated to reducing the National Debt.
We have, and shall continue to have, gloomy Jeremiahs who say that everything is black. It does not matter who utters criticism, whether it is from this


side of the Committee or the other; the cold fact is that the standard of living for the mass of our population has increased during the last 12 years beyond anything we could have dreamt of.
The hon. Member for Cardiff, South-East (Mr. Callaghan) should temper his enthusiasm for a seat on this side of the Chamber. He likes to be known as the "Shadow" Chancellor, but a "Shadow" Chancellor deals only with shadow economics. He seems to think that he has a divine right of succession, but he has not. He should remember that during the time of the Labour Government from 1945 to 1951 we borrowed from the Americans and had devaluation, and that in 1951 the Conservative Government, who have been criticised so much during the debate, took office in what nobody can deny was a bankrupt situation. We had reserves about one-twentieth of what they are today, and they were pouring away at the rate of £25 million a week. How long could that have gone on? It is political impertinence of the Opposition to criticise the economic administration of the Conservative Government.
I know that during the debate an emotional appeal will be made on behalf of the retired pensioners and those on low, fixed incomes. What we must remember is that unless action is taken to keep inflation at bay the people who will suffer most, and suffer first, are those who are on pension, or on small, fixed incomes.
We should be careful about the way we talk lest we talk ourselves into a crisis. My conviction is that the Opposition are furious about the Budget merely because they cannot accuse the Government of having brought in a vote-catching Budget.
I welcome the Budget. I should like to give a few more figures which I do not think anybody can criticise. The Socialist Administration, in successive Budgets between 1945 and 1951, sometimes gave tax away and sometimes clawed it back, and the overall result was that at the end of the day, in 1951, they were taking £112 million more in taxation than at the beginning. Between 1952 and 1964, including the present Budget—that is, over a series of 15

Budgets—the Conservative Government, through taxation balances, have reduced their taxation by £1,328 million.

Mr. Ray Gunter: The hon. Gentleman has referred to the crisis years that followed the war. I should have thought that he might have recalled the statement made to the President of the United States by his right hon. Friend the Member for Woodford (Sir W. Churchill), that he came with a sorry heart back to a bankrupt country because of what it cost us during the war.

Mr. Clark: I accept that, but—I am sure the hon. Gentleman wishes to be fair about it—I said that the greatest indictment of the Socialist Administration during that period was that they lost the opportunity of recapturing our export markets.

Mr. Bence: Rubbish.

Mr. Clark: While it is true that my right hon. Friend the Member for Woodford (Sir W. Churchill) said that, we must remember that in the interim we had borrowed nearly £2,000 million from America and Canada and had had devaluation and our reserves were a little short of £1,000 million.

Mr. Bence: When the hon. Gentleman talks about the Labour Government losing the opportunity to recapture our export markets between 1945 and 1951, I would remind him that when Sir Stafford Cripps was allocating steel only for manufactures for export, members of the Conservative Party, which was then the Opposition in this House, were campaigning here and in the country for us to sell more goods in the home market, stop rationing and stop exporting.

Mr. Clark: I accept that, but it still does not alter the fact that when the Labour Government were in power they had a wonderful opportunity to do what I have suggested. I cannot see that what the Tories were doing here and in the country should have had any effect on their policy.
I welcome the Budget in the sense that last year my right hon. Friend introduced a Budget the theme of which was expansion without inflation, and I should have thought that the present


one was one of consolidation. The economy is going well. What we have to do—I cannot emphasise this too much—is not to talk as if we were in a financial crisis. Many prognostications have been made about the result of the General Election. All I can say is that I hope, and fancy, that my right hon. Friend the Chancellor of the Exchequer will be introducing another Budget next year.

6.48 p.m.

Mr. Merlyn Rees: There was a great deal in the speech by the hon. Member for Nottingham, South (Mr. W. Clark) with which I did not agree. I agreed, however, with that part of his speech in which he referred to the possibilities in the undeveloped areas of the world. This is something which I hope that we shall in the years to come investigate very closely. I am sure that a rising standard of living in the rest of the world could do nothing but good, certainly morally and also materially, for all our industries.
I am very pleased that the hon. Gentleman spent a great deal of his time speaking about the iniquities of the Labour Government between 1945 and 1951. I can assure him from personal experience that this does not wash with the electorate. I hope that for the sake of informed discussion the hon. Member will look again at that period. I think he has forgotten that there had been a war and that our exports had dropped to nothing as we became an aircraft-carrier for Europe. Also, it was not a question of just starting from scratch in 1945. The devaluation in 1949 was not only of the British £ but of all the currencies of Europe. It was caused largely because the £ had been set at too high a level in the Bretton Woods discussions in 1944–45. Also, the hon. Gentleman's strictures about accepting the American loan completely ignore the economic position of Europe at the time.
The fact that it was spent so quickly was largely due to the shortage of raw materials, which were competed for by almost all countries. We needed them as well and we had at the time no exports to pay for them. Inevitably, the loan had to he spent in this way. It all makes an interesting historical debate but it has no relevance in the

country now and if the hon. Gentleman wants to lose Nottingham I suggest that he continues on this tack when the election comes.

Mr. Bence: He will lose it in any case.

Mr. Rees: One of the great weaknesses of economic theory is that its analysis is eased on an economic man whose motivation is completely materialistic. Such a man does not exist and that is why much economic theory falls in practice. One of the political weaknesses of the speech of the Chief Secretary to the Treasury was that he based his approach on the existence of large numbers of material, political men who will only vote according to the posters of the party opposite—"Do not chuck it away". The whole of his speech was couched in those terms—that things are better, that the Conservatives have done this and that and that, for material reasons, people should vote for them.
I concede, that such an approach as "You have never had it so good" could appeal in 1959, but it would be better for the good of the country if the appeal of both sides were not couched in these materialist terms, because the pressure of the problem facing the country and the Government—whether Labour or Conservative—are known to us all and we shall all have to face them, despite the increased standard of living—which is very high in some cases; an example is Birmingham—over the last 12 years.
None of us can hope to opt out of these problems and it would be better if we faced them squarely because the world, as has been said many times, does not owe us a living. We should be much better off in putting our houses in order, differing honourably, as we do, rather than in indulging in these pettifogging quibbles about the wicked Labour Government of 1945.
I shall rot concentrate on the wider issues of the Budget nor on the esoteric arguments about whether £100 million or £250 million are enough in additional taxation. I shall deal with the question of regional planning. My interest in that subject arises from the needs of the area I represent and from my own experience as a very young person in a family that was much affected by the policy conjured


up in the 1920s and the 1930s by politicians who believed purely in the laws of supply and demand, in the invisible hand that would sort everything out.
The right hon. Member for Wolverhampton, South-West (Mr. Powell) believes in these theories. Where he falls down, and not just economically, is that, ultimately, it is people who suffer and hat the sufferings of the people when one allows economic forces to work themselves out are incalculable in the long run as well as in the short run.
I am not very much interested, except historically, in the 1920s and the 1930s. I am far more concerned with the 1960s and the 1970s. But we can learn a lot from the past, and one lesson I have learnt is that people matter and can get hurt and that, whatever else we do, economic change must be guided—but not, of course, cosetted so much that it cannot move properly. We must make sure, when making the changes which must and will come, that people do not suffer unnecessarily.
My interest in regional planning also stems from my belief that the planning processes that are being introduced at the moment—which the right hon. Member for Wolverhampton, South-West believes will benefit the barbarians—the N.E.D.C. and the little "Neddies", need to be refined by the addition of regional planning boards which would enable economic problems to be considered in the light of local needs and circumstances.
I do not want yet another national board. Obviously, in a country as small as ours, much of our policy must come from the centre, but implementation can be better carried out by people who know local problems more than do economists in Whitehall. The Government are committed to regional planning by the title of the Secretary of State for Industry, Trade and Regional Development, by the issue of a number of White Papers and by statements in the House of Commons by the Secretary of State last December. But that commitment is not being pursued urgently enough.
I wish that the Secretary of State were as concerned with regional planning as he is with resale price maintenance. One of the interesting characters of our race courses is Prince Monolulu who, dressed in gaudy robes, cries, "I've got a horse".

The Secretary of State is the Prince Monolulu of British politics.
Two years ago he "got" Europe. Now he has "got" resale price maintenance. I wish that he would temper his 18th century enthusiasm for ideas and spread them a little more thinly, for he would then get nearer the truth. He would have far more time to deal with the great problems of regional planning. It is not just to concentrate on financial and tax incentives such as we had in the Budget last year. They are important but they are not enough.
I want to bring to the notice of the Committee the needs of the West Riding of Yorkshire, with its local government neighbour, the East Riding. This area needs the attention of our regional planners, not because of galloping unemployment or because of the problems so clearly and movingly outlined by my hon. Friend the Member for Fife, West (Mr. W. Hamilton) but because of changes that are to come and which must necessarily come in that part of England. It needs attention also because increased production of new kinds of goods could be concentrated there for the growth that is urgently needed and which will not co easily come about in the congested areas of the South-East and the Midlands.
Between 1951 and 1961—these are statistics which cannot lie—there was a net loss of 92,000 people from the East and West Ridings. There was a tendency for them to be the young and the skilled. In the same period, particularly during the 1950s, there was a fast rate of growth in the country as a whole in chemicals, vehicles, engineering, electrical goods and paper and print. But in the East and West Ridings the speed of growth in these most important industries has been below the national average. In that part of Yorkshire also, there are major industries that face great technical changes in the next 10 or 15 years.
The Yorkshire coalfield is the most profitable in the country. This is because of the geological situation and its newness. There are also problems, as my hon. Friend the Member for Rotherham (Mr. O'Malley) knows, facing the steel industry in years to come because of automation.
Changes are already taking place in the textile industry. It is a great mistake, as textile men have put to me


very forcibly, to write off the Yorkshire textile industry as if it were some out-of-date Luddite organisation which has not changed in 100 years. A great deal of interesting work is going on there from the scientific and technological point of view, but it brings economic and social problems. On the positive side, the assets side, machine tools are an important industry in Yorkshire, but lack in that area an electronics industry. The two need to be married together, because one of the developments of the future is a closer connection between electronics and machine tools.
There will quite rightly be very interesting arguments about the merits or otherwise of nationalising iron and steel, and I would be quite prepared to play a part in the argument, believing that it is most important that the future Government of my hon. Friends should nationalise that industry. But far more important than any of the old arguments about public ownership is the development of the National Research Development Corporation. This is a respect in which scientific ideas can be translated into fact, sometimes by publicly-owned industries, sometimes by privately-owned industries, and sometimes by an amalgamation of the two. The N.R.D.C. can play a major part in the development of the area which I have been discussing. Yorkshire, East and West Ridings, needs to think of the future, although there is no unemployment now of the sort to which my hon. Friend the Member for Fife, West referred.

Mr. Brian O'Malley: Would not my hon. Friend agree that the criterion is not present high unemployment, and that all the evidence from the increasing population and the likely demand for labour in industries which are not growth industries shows that, unless there is some regional planning and new industries are brought into the area which he is discussing, we shall have the problem of high and endemic unemployment in the next 10 years?

Mr. Rees: I wholeheartedly agree. I bring to the Committee's attention a very valuable statistical document which was brought to my notice this morning by the social science side of the Bradford College of Advanced Technology, which has been considering these problems of the next 10 years statistically

and otherwise. I should like to refer to that and the work done by the Leeds School of Architecture in a moment.
Regional planning is not concerned just with economic affairs in the narrow sense of the term. It is not concerned just with iron, steel, coal, textiles and so on. It is also concerned with communications. The East and West Ridings hive a problem in that road communications with London and the South are not what they should be. I concede that, some time in the next two years, it is hoped that the M.1 will be through the meeting the motorway crossing the Pennines, which is on the cards. Communication is important when one considers regional development. Education also matters, as do amenities in general.
We should not lose sight of these things in any discussion of regional planning. Already in the East and West Ridings the rate of building is not keeping pace not only with the number of existing slums—slums in the local authority sense of the term—but with those coming into being every year. In so many ways, when one gets north of the Trent, the quality of human existence, for the reasons given by my hon. Friend the Member for Fife, West—the remaining scars of the Industrial Revolution—is not the same as in the South. That is why so often a lad of parts moves out and goes to the South. Regional planning must be thought of in the full context of parks and open spaces and quality of human existence.
This can be done only by the creation of a regional planning board, not to usurp the functions of local authorities—although change may be needed in that respect and we have recently had a report on the subject from the West Riding of Yorkshire—but to have regional planning as national government writ on a smaller scale. I do not want to start an argument about whether it should be Leeds or Sheffield in this area, but if the central Ministry offices were concentrated in such a city, we could use local brains and initiative. I remind the Government that we have not yet had White Papers on this subject for the country as a whole. We have had them for Scotland and the South-East.

Mr. W. Hamilton: Part of Scotland.

Mr. Rees: Part of Scotland, as my hon. Friend reminds me. But little thought has been given to the suitability of the planning areas already investigated. Is it accepted that the area chosen for the South-East Study is a viable planning area? It goes from the Wash across to Dorset. What is the centre of such an area? Would it not have been better to have concentrated on East Anglia and to have regarded Dorset as part of the South-West. These are problems on which any reasonable men might disagree, but at least it must be clear that this huge section of England is not a planning area. The East and West Ridings together are not a suitable area for a Yorkshire planning area. They would need to take in parts of North Lincolnshire and North Nottinghamshire and Derbyshire. But no decisions on these lines have been made.
If only the Government would publish a map of what the planning areas are to be, we would have more information. Departments of the Leeds School of Architecture and the Bradford College of Advanced Technology are considering these problems. If there were only a rough outline, there would be more informed discussion in the regions without committing the Government to what the final areas would be. The Government have not given nearly enough attention to regional planning since last December when they said that it was now a major part of Government economic policy. They have concentrated too much on Budgetary measures. Whatever else happens electorally, I hope that the right hon. Gentleman responsible for this sector of the economy will give far more thought to this aspect of regional planning.
I now turn to the more fiscal aspects of the Budget, again relating them to my constituency. I brought to the notice of the Economic Secretary some weeks ago the adverse results of the 15 per cent. tax on the wholesale value of soft drinks, a tax imposed some time ago. This is not a major industry whose problems will bring the country to its economic knees, but I have found adverse effects from this tax in my constituency. One firm, for example, is already economising on its staff and is said to be

already considering giving the sack to men who have worked for it for 40 years. I have evidence that five other firms nearby are considering closure.
I agree with the Economic Secretary that something is happening in the soft drinks industry and that there are economies of scale in bottling and distribution. That may be true, but all my evidence is that the 15 per cent. tax unfairly penalises the small firms. They have problems anyway, but the adding of this one more straw to the camel's back—because there has been a reduction in the consumption of soft drinks—is regarded as a penal tax. I sometimes think that right hon. Gentlemen opposite are imitating the political businessman in the United States who said, "What is good enough for General Motors is good enough for the United States". I sometimes think that the Government work on the assumption that what is good enough for Schweppes is good enough for Great Britain. I hope that the Economic Secretary will be able to assure me that he has thought about this matter since he answered my Question on it, because many firms are affected, going down to the area which he represents—which may bring it nearer home to him—and that he will agree that there is a good case for reconsidering this 15 per cent. tax.
The Chancellor did not present a Budget which looked at the whole field of economic affairs. I think that this afternoon I have been much the same and been, if not parochial, just a little wider than parochial and dealt with problems in the area which I represent, but I propose now to return to the remarks that I made at the beginning of my speech.
First, there are real economic problems which face this country. We have heard it all before from both sides of the Committee. People get fed up with it in the country, but it is none the less true that we are a small island, and we can make our living only by using the brains and intelligence which are to be found in all parts of the community. Brains and intelligence are not the prerogative of one section of the population, and, unless we realise that, through education in particular, we are doomed.
This afternoon we heard that the Battle of Waterloo was won on the playing fields of Eton. In 1940 somebody on this side of the Committee said that the Battle of Britain would be won on the playing fields of the State-aided grammar schools. I know that the Battle of Britain in the 'sixties and the 'seventies will be won not by people from one small section of the community, but by us all concentrating on the issues that face us, by realising that we are not the country that we were in the 'twenties and the 'thirties, with huge areas marked red all over the map, when we used to march on the school playground and play silly games on Empire Day, and so on.
All that has gone. We are basically where we were between 1945 and 1950. I do not accept what the hon. Gentleman says. It is a question of degree. We have not the resources that we had 20 years ago. If the hon. Gentleman looks at the gold and dollar reserves of 1951 he will see that they were better then than they are now. The hon. Gentleman has in his total figure money from the International Monetary Fund, and so on.
However, all that is small stuff. We shall get through only if we concentrate on making this country, not the industrial workshop of the world as in the old days, but, to use the words of my right hon. Friend the Leader of the Opposition, by making it the scientific workshop of the world. If we do that, we shall win through. If we resort to internecine argument and things that do not matter, we deserve to fail.

7.12 p.m.

Mr. F. M. Bennett: Before doing anything else, I should like to welcome the remarks of the hon. Member for Leeds, South (Mr. Merlyn Rees) about the soft drinks industry, on an admittedly narrow constituency point. I am not satisfied that this tax is worth while, and I should like the Chancellor to reconsider it. On the other hand, I am not satisfied that it is causing any particular hardship to the consumer. It seems to me that the consumption of soft drinks depends on the weather—on whether it is hot or cold. But, from the point of view of the return compared with the damage it is doing, or may be doing to the smaller manufacturers, I

think that my right hon. Friend should think again about whether to continue the imposition of this tax.
In view of what I shall say later, I should like now to pay tribute to the central theme of the speech of the hon. Member for Leeds, South. It is always a little difficult to praise hon. Gentlemen opposite without getting them in trouble, but I say in all sincerity that it was rather welcome to hear someone admit that whichever party is in power the problems of this island, with a Commonwealth and Empire that has drastically altered, will be very severe, and that it is no good saying that the problems depend on whether the Korean War is on or off, or we have just finished fighting a war, or had a loan, or anything else. These problems will long be with us, whichever party is in power.
I turn from that to the comparisons which have been made between 1945 and 1951 and the period when we have been in power. The party opposite cannot have it both ways. I am not suggesting that the hon. Member for Leeds, South did, but certainly the Opposition as a whole cannot have it both ways. If things were going very well between 1945 and 1951, taking into account all the post-war difficulties, accepting, as I do not, that they made good use of the American loan, and accepting also that devaluation of the £ was a matter of bitter necessity, it is a little difficult to understand why they resigned and lost an election only 18 months after they were elected.
If things were going so well, if the party opposite were doing so well in the teeth of all the difficulties, it is a little difficult to understand why a grateful electorate did not say, "Hurrah boys, you are doing well. You have had to face all the difficulties. You have only just finished fighting a war. You could not help devaluation", and send them back with a thumping majority, instead of inflicting on them a resounding defeat.

Mr. Bence: In the 1951 election we polled more votes than we did in 1945 and 1950, but, because of the redistribution of seats, we lost.

Mr. Bennett: I should be out of order if I were to go into the electoral statistics. After every election someone tries to work the figures round to prove one


thing or another. A party either wins an election or loses it. If by any mischance we lose the next election, the hon. Gentleman will be equally indignant if I then point out that we and the Liberals have polled more votes than the Socialists. The hon. Gentleman will be the first to say that that is nonsense, and that his party has won. Let us get away from this cant. What I am saying cannot be called cant or humbug. Every party resorts to these tactics, and I am at least saying that the hon. Member for Leeds, South is honest and has not tried any of those tricks. But if I continue on this theme I shall be on my feet much longer than I intended to be.
I accept that between 1945 and 1951 the party opposite had to face difficulties, but one must take into account that there were corresponding advantages. There was the American loan, and, as my hon. Friend the Member for Nottingham, South (Mr. W. Clark) said, there was a unique opportunity for improving our export position because Italy, Japan, and Germany were on their knees. Now, however, those countries are fierce competitors, and from now on, whichever party is in power, there will be difficulties and corresponding disadvantages and advantages.
The party opposite cannot have it both ways. Either it did very well between 1945 and 1951, or it did not. If it did extremely well, it is odd why it has been out of power for 12 years, without any certainty that that state of affairs will not continue for some time to come.

Mr. C. Pannell: Would the hon. Gentleman like to bet on that?

Mr. Bennett: I will take a steady bet on Torquay. I think that I am being tempted to get out of order. I have responded to the challenge in the only way for which I can accept responsibility.
I have listened to the whole of the debate on the Budget. Whatever the public opinion polls may say, and whatever the results of by-elections may have been, I find it hard to credit that the electorate would be so benightedly foolish as to return to power a party which has no real plans related to the economic problems of this country. Let me add

that I exclude from that comment one or two remarks made by the hon. Member for Leeds, South. I wish that the entire electorate, including the people from Leeds, had been able to listen to this debate. Had they done so, I am sure that there would be a dramatic change in the Gallup polls.
We were told earlier today by the hon. Member for Cardiff, South-East (Mr. Callaghan)—I do not know whether he was in his seat, or half way out, or three-quarters of the way out at the time—that we should conduct our debate like responsible adults. That was his riposte after he had been shown to have been inaccurate in an earlier remark.
Let me give some of the examples of this so-called responsible adult debating which we have heard from hon. Gentlemen opposite during the last few days. We have been teased today and previously because the returns on the speculative gains were not available, despite the fact that in one case, for real property, three years was the figure, and in the other, for shares, it was six months. This might be a fair point if the hon. Members opposite had not pressed us to make these periods longer. Had that been done, it would have taken even longer to get the figures they require. They were asking for a year or even longer in one case, and five years or even longer in the other. If they had had their way, the period would not have been six months, but would have been longer, and in the other case it would not have been three years, but longer, and they would have had to wait for the next Government to come into power before they started to get the figures.

Mr. Houghton: With respect to the hon. Gentleman, he is making the same mistake as the Chief Secretary did. Six months is the limit of liability, but three years is the limit of tax liability. Capital gains can be made in a shorter period than six months on transactions in equity shares, and capital gains can be made on the buying and selling of land in a much shorter period than three years. I shall be very surprised if there are not many assessments on capital profits on land transactions for those who bought and sold within that short period. They do not have to wait for three years.

Mr. Bennett: That intervention was not worthy of the hon. Gentleman. Requests were being made for figures which, patently, could not be available at this stage. The hon. Gentleman said in his observations, as have his hon. Friends, that one purpose of the tax was to deter people from trying to get a tax-free income and that many people who would otherwise have hurried on the sales of equity shares or purchases of land have in fact been deterred from doing so and have held on to their investments.
If the hon. Gentleman had his way, and the tax were paid at whatever stage that profits were, in fact, realised, many people would hold on for many more years—it has happened in the United States of America—and the final figures from that tax would never be forthcoming, because many people, if faced with that situation, would not realise their assets at all because in that way they would not have to pay what they might regard as a penal tax.
Therefore, the argument that we should provide returns for that which the Opposition were trying to connect into a position when it would have taken a great deal longer to get them, if at all, is complete nonsense. If that is in doubt—well, I do not think that I can complete that sentence within the rules of order.

Mr. Loughlin: Perhaps the hon. Member could provide a little clarification. As I understand, the six months' period is the period during which the shares have to be held to avoid tax—this is the issue—so that we could get a return, in the end, of the tax year irrespective of whether the six months coincided with the first part of the tax year or with the second part. It therefore seems to me, and perhaps the hon. Member will explain it to me, to be reasonable to assume that some tax has been paid on this proposal.

Mr. Bennett: I do not think that the Chief Secretary, when he made his speech, denied that some information was forthcoming. He said that if we took into account the actual figures of six months, the date from which it came into effect and the fiscal year and the returns that had to come in, very few figures were available at the present

time. I repeat again that it has no reference to the point, that if the Opposition's pressure had been accepted, and we had made the periods much longer, it would have been even less simple to get figures about this matter.
I turn to something which the hon. Member for Cardiff, South-East mentioned. During his criticism of my right hon. Friend he made some withering remark about the Conservative Party concentrating its fire on the poor little shopkeeper concerning r.p.m., this being about the only thing that we could find to do. I took the trouble early this afternoon to go into the Library and get out a statement on resale price maintenance made in June, 1951, by the then Labour Government. This had nothing to do with the Korean War. This was a statement of domestic policy, so it is no good hon. Members opposite trying to wriggle out concerning the Korean War on this one.
In June of that year a statement on the matter way issued by the Board of Trade. It had been prepared during the period when the present Leader of the Opposition was President of the Board of Trade. In this was an outright condemnation of resale price maintenance and was carefully set out as part of the programme of the Labour Party at that time, with none of the safeguards which are now going in. Yet hon. Members opposite, in view of that statement, which has never been contradicted, have the impertinence to come here and talk about the poor little retailer and the Tory Party concentrating on him through the r.p.m. Bill.
The hon. Member for Cardiff, South-East also made the point that the Chancellor should not be content in trying to keep the national productivity increase at 4 per emit. He said, "What a target to try to go for; just to keep it at 4 per cent. They ought to be thinking of doing much better than that." In those circumstances, one would have thought that the party opposite would have been against any increases in taxes at all, and that immediately the Budget Resolutions were put to the House they would have voted then all down. But this did not happen. He said that my right hon. Friend was wrong and ought not to put taxes on. Yet hon. Members opposite are apparently happy that there should be


tax increases. The only thing that they are worried about it what form the taxes should be, whether it should be direct or indirect.
So what is the point? Is my right hon. Friend to try to stick to 4 per cent., or follow the advice of the hon. Member for Cardiff, South-East, and go to a greater figure, in which case the party opposite should say, "This is far too unambitious. Take the brakes off. Let us get up to 6 per cent?" as the hon. Member the "Shadow" Chancellor wants—long may his shadow remain in that form. All we have had is an extremely able argument by the hon. Member for Sowerby (Mr. Houghton) about how taxes should be raised. I did not quite connect his speech today with the quotation against him the other day about how he thought taxation should move up or down as against direct or indirect taxes. Perhaps he has had second thoughts on that.
Now, I thought that he was speaking in favour of more direct taxes. Is it not about time that we were told that indirect taxation is wrong? Since there are only one or two forms of direct taxation, what we want to know from hon. Members opposite is whether they think that this year we ought to increase Income Tax or Profits Tax. If they think either of those things, does that fit in with saying that my right hon. Friend ought not to keep the productivity figure at 4 per cent., but go for a much higher figure? These questions have remained totally unanswered during the four days' debate. That is why I feel that all my right hon. and hon. Friends should go away from this debate feeling far more confident about the political future than we have for some time past.
Last year proved the complete success of the Chancellor's prognosis as to what would happen in the economic field. He has been told that he was lucky. I can only say that if he had made the wrong guess he would not then have been accused of being unlucky. He would have been told that he was foolish, misguided, and everything else. If he is right, he is lucky, but if he is wrong, he is wrong. This, apparently, is another example of fair shares.
In my estimation the figure which the Chancellor chose is about right—£100

million. I frankly say, too, even though I know that this may have caused unpopularity in certain regions, that if we are to increase a tax it is better to do it on luxuries rather than on necessities. I still say that, on balance, it is probably better to tackle items which no one would ever regard as the necessities of life—I enjoy a drink as much as the next man, although I do not smoke. It is better to do that than to tax essential goods if one has to raise extra taxes. This has been the constant theme from the party opposite for a long time.
There is only one possible fear about my right hon. Friend's proposals. I am not quite sure, unfortunately, that they take adequate account of the fears which exist throughout the world at present—and right hon. Members opposite know that it is true, however much they jeer—the widespread fear in Western countries and overseas lest the Labour Party is returned at the next election. [Laughter.] I thought that there would be laughter, but the very facts prove it.
Let us see what happened about the position of sterling when the Prime Minister decided to defer the election till the autumn. Immediately, there was a recovery in the value of sterling as the prospect of the Labour Party coming to power receded. Could hon. Members opposite give me any other reason why sterling, which had been declining in value in the world market, suddenly rose? I would willingly give way.

Mr. Diamond: Will the hon. Gentleman tell us what happened to the gilt-edged market following the Chancellor's Budget?

Mr. Bennett: Again, that is an absolutely different point. [HON. MEMBERS: "Tell us."] I cannot now educate hon. Members opposite on every aspect of policy. I know that this is an uncomfortable subject for them, and I do not intend to give way again.
I was concentrating on the reason why sterling invariably depreciates in value throughout the world whenever there is a prospect of a Labour Government's coming to power. This fact can be checked and proved over and over again by looking at the figures showing the way in which sterling has moved over a long period. My right hon. Friend's most arduous task between now and the


election is not to carry out his usual good economics at home, but to prove, through his policies, that the prospect of a Socialist Government being returned to power is unthinkable. If he can do that he will achieve more success than he can by any single budgetary proposal.

7.31 p.m.

Mr. John Diamond: The hon. Member for Torquay (Mr. F. M. Bennett) has said two or three things which require immediate replies. First, he tried to connect the movement of sterling with the prospect of a Labour Government. I will make no comment about the desire of the hon. Member to create trouble for this country in matters of sterling, or about his patriotic attitude. I merely say that those people who grant us credits and loans, under the Basle Agreement, the International Monetary Fund and the rest, do not take such a superficial view as does the hon. Member. They know that this country is determined to have a Labour Government, and that under these conditions our people will put forth their best effort.
It is when we put forth our best effort that our country has the greatest security for loans and credits, and when it has its best standing in respect of sterling. The two points made by the hon. Member do not necessarily have any relationship to each other. The hon. Gentleman should have gone on to say what the whole of the stock market knows and has repeated since the Budget, namely, that the Budget proposals are not sufficient in themselves to prevent inflationary tendencies. This year there is less confidence in the Government and less confidence in gilt-edged stocks. They have taken one of their biggest falls for years.
Another point referred to by the hon. Gentleman which should be replied to immediately concerned the speculative gains tax. As this has been central to the Chancellor's proposals, it is worth while spending a moment or two getting the situation straight, especially as the Chief Secretary, in one of his less endearing moments, when addressing my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), said, "I shall try to explain this to the hon. Member in words of one syllable". When anyone talks like that we can

generally take it that he has not followed the point.
The question put by my hon. Friend the Member for Cardiff, South-East was a quite straightforward one, and I repeat it. It has not been answered. I am not asking what was the number of assessments raised in respect of this tax. I realise that it will take a little time to as ascertain that number. But the year 1963–64 was the first year when this tax applied, and since then there have undoubtedly been some transactions resulting in liability both in land and in stocks and shares. It was utterly misleading of the Chief Secretary to try to pretend that we had to wait for three years before we should know whether anyone had bought a house in one month and sold it at a profit the following month.
The person who bought my house in Putney dill not even appear. He had a solicitor, and the sub-purchase realised a £5,000 profit. It was bought and sold in literally no time because, as every solicitor knows, in these cases the property is conveyed directly from the original owner to the sub-owner. In the process a £5,000 capital profit, free of tax, was made. That was before the tax was introduced. There will have been many other similar transactions since there in respect of which the tax burden will not have been sufficient to prevent the persons concerned from making a nice profit. Until the tax is 100 per cent. or more there will be a balance left. It is obvious that there have been transactions which have attracted a speculative gains tax.
I am not asking the Chancellor to tell me the number of assessments that have been raised, or the income from this source in the year 1963–64; I am telling him that we have seen his Financial Statement, published by him, under his own authority, on a cash basis—cash coming in and cash going out. We find that sufficiently satisfactory—although we may be critical in other respects—and sufficiently accurate for the accounts of the nation as a whole. The simple question is: of the cash which came in, and which is shown in the Statement, under the Chancellor's authority, how much was in respect of the speculative gains tax? It is as simple as that. It is not possible to say that the figure is not


known, or is not capable of being known. Our suspicion is that it is extremely low. We thought that it would be, and we believe that we are now being fobbed off until after the General Election.
The tax was introduced by the right hon. Gentleman's predecessor to mollify the workers when the incomes policy notion was first put about by the party opposite. This tax was an attempt to redress the balance which had been disturbed by the £83 million given to the Surtax payers in the previous year. The party opposite said, "Here is what the Conservative Government are doing to put the balance right. They will put a swingeing tax on capital profits." We then said that the tax was likely to produce nothing, and my suspicion is that it has produced almost nothing in this year. If I am wrong, I should like to know what the figure is. It is as simple as that.
It is not possible to say that the figure cannot be obtained. It merely involves the analysis of cash received. It is not possible for the Chief Secretary to say that he cannot find out very quickly what cash has been received from tax under a particular Schedule. The sooner we receive this information the sooner we shall be relieved of our anxiety as to whether we are being fobbed off until after the General Election.
I now turn for a few moments to the Budget in general. I wish that my hon. Friend the Member for Sowerby (Mr. Houghton) were here to hear me say that anybody who can make an interesting, challenging and imaginative speech on a Budget of this kind—as my hon. Friend did—deserves everybody's congratulations. This Budget is not a serious one. I am delighted that the Chancellor is here to hear me say this. The test lies in the proposals. In all, the proposals involve a sum of £100 million. We are not entitled to talk about it at all, really If I say that it is too much, or too little, I am really saying that it is sufficiently substantial to be able to discuss it—but we cannot discuss it, because it is less than the margin of error on the Chancellor's own figures for the previous year. In his proposals for the previous year he arrived at certain figures in respect of various taxes, but he found himself over

£150 million wrong. Therefore, how can he say, this year, "My considered proposals to meet the situation involve the sum of £100 million"? It is utter nonsense.
When we read the speech and compare it with the proposals, the conclusion is as plain as a pikestaff. The speech is the speech the Chancellor prepared—before the decision to postpone the election—to deal with the problems that should be dealt with. The proposals are the proposals of the Chancellor after the election had been postponed, knowing the things he wanted to do but has not time to do or which are not in the interests of the party opposite, which we understand from the Prime Minister are synonymous with the interests of the nation as a whole.
It is clear that this was a Budget prepared so far as concerns the proposals for a General Election in June. Then the Chancellor fought and lost and, when the election was postponed, he had to make a speech. He dealt with the matter fully as a man with his knowledge and capacity could do only out of self-respect. If we go into the speech a little more closely, we find certain outstanding points which I shall put to the Committee.
First, there is the betting tax referred to in column 246 of the OFFICIAL REPORT. There is a full discussion of the tax and then the conclusion relating to proposals:
For these reasons I conclude that the time is not yet ripe to introduce a general betting tax.
Then we come to tax reform and simplification. In column 247 we have reference to that, and then comes the conclusion concerning Budget proposals:
I do not, therefore, propose legislation this year.
We go to another matter, the reform of the Exchequer accounts. In column 250 there is the discussion of the reform of the Exchequer accounts fully discussed and at the end we read the conclusion:
I do not think that we are yet ready to make firm proposals for a revision of the Exchequer accounts."—[OFFICIAL REPORT, 14th April, 1964; Vol. 693, cc. 246, 248, 250.]
Each time the conclusion is that there is nothing to be done. This is curious,


for there has been plenty of time—over a year's consideration in one case—for a conclusion to be reached. Then it is decided that it will be published as a White Paper instead of taking the form of legislation.
It is clear that this Budget is not to be taken seriously. It is something used as a stop-gap in order to make a speech. On such proposals as are before us anyone who could make a challenging speech would be a better orator than I am. We are faced with the conclusion that nothing can be done. It is not surprising that the question all over the country is, "When are you going to stop dawdling, Maudling?". [Interruption.] I do not know if an hon. Member wishes to intervene.

Mr. Donald Box: I said that the expression was a little jaded; it came out 12 months ago.

Mr. Diamond: The whole Government are jaded, and the whole of this Parliament. There is nothing serious to discuss because there are no Budget proposals before us worth discussing.
I had hoped that the Chancellor would put before us any one of the three things which he has said require attention. First, and perhaps the most urgent, is the possibility of a worsening in the balance of payments. Second, and of equal importance, is the creation of an attitude of mind in which an incomes policy can be produced. Perhaps I should turn straight to that as a matter in which I have a particular interest and which I gather is appropriate for discussion in today's debate.
Essentially what is required is a sense of fairness, as has been said by many hon. Members. I want to stress that there is one major argument and when there is a major heavy argument we do not need a lot of minor arguments to support it. The major argument, as every receiver of wages understands only too well, is that if we ask a worker to accept less wages than he might otherwise get because of his particular situation at that time he knows that there will be more profits. It is as simple as that. The money either goes to wages or, if it is not so spent, it is available for profits.
Unless there is some method of dealing with profits, then it is a waste of time

to ask any one with common sense to say, "I will voluntarily accept a restriction in my potential wage packet for the benefit of the nation as a whole", knowing full well that the immediate result will be to give his employer an increase in the profit margin. It is just nonsense to suppose that there will ever be a time when we can get people to accept that situation.
We were told by the hon. Member for Nottingham, South (Mr. W. Clark) that people receive what they earn and that we get only what we work for. That is curious in the present context. I have been interesting myself in a case where a very able electronics company manufactured a missile under a Government contract. I doubt if it is right to say that in that case the workers got what they earned. It was a very good missile. It served the job very well. It was sold abroad and no doubt the workmanship was excellent.
The workers got about £½million, but the owners got £5 million. If the workers had got what they earned—let us assume that they all earned it and the bosses and workers took their coats off and rolled up their shirt sleeves and were entitled to whatever was remaining—they would have received about nine times whatever their wages were. Suppose they were getting an average wage of £20 a week—they were very skilled people—they would receive £180 or £200 a week if they received what they earned. I do not think they did so.
There would have been a tremendous cry from the other side of the Committee if those workers had been taking £200 a week. I do not think that there has been an equal cry because it is the other way round, and, instead of the money going to a body of workers, the whole of it has gone to one family. It is no use in these circumstances trying to persuade engineering workers that there are no profits available to meet their demands for increased wages. That is nonsense when they see time and again when the balance sheet is published that substantial profits have been made and there is a substantial increase in dividends. Dividends are going up faster than wages and rents are going up much faster than wages.
Until the Government start to tackle this problem we shall get nowhere, and


we want to get somewhere. The Chancellor devoted a good deal of his speech—not of his proposals, but his speech—to this. He knows that the trouble stems from the other side. The employers have met and considered the matter and have decided that they are to have as large profit as possible and no restriction. They have rejected any proposals which have been made. The Government have not put forward a single idea to help in this situation.
Another point arises from a sense of fairness which everyone realises full well is not a minor but a major argument. That is the unfairness of our taxation system. Most people, when trying to assess the unfairness of our taxation system, refer to the fact that capital gains are not taxed, or for all practical purposes are not taxed. They refer to the fact that the burden on the small wage earner is proportionately greater all the time, as it is.
I look upon it in an additional way, because of the experience people in my profession have. I know—no one in the Committee can deny this—that there is only one class of persons in the whole country who pay the tax they are supposed to pay on paper—that is, the amount provided for in the tax schedules. I refer to wage and salary earners. They have no chance of doing anything else. The tax is deducted at source. There is no funny business. They pay their taxes in full. I say that as a matter of fact. I should be glad to be corrected if anyone thinks I am wrong.

Captain Walter Elliot: What about the retired person who has invested his savings in industry and gets paid by dividend, which is taxed at source?

Mr. Diamond: I am coming on to deal with that.

Mr. Bence: My hon. Friend was talking about earned income.

Mr. Diamond: I said—having regard to the hon. and gallant Gentleman's interruption, I repeat it—that by and large those who rely on unearned income have capital and have advice and can—the hon. and gallant Gentleman knows full well that they can—make arrangements, as a result of which

much of the burden is reduced. The Surtax payer does not pay the Surtax that theoretically the rates require. Estates do not pay the Estate Duty that theoretically the rates require. The director who has his expense allowance, his travelling allowance and his Bentley, does not pay the tax, and live on his salary, which notionally on paper is required. None of these things happens. It happens only to the ordinary wage and salary earner. He pays in full.

Captain W. Elliot: It is easy enough for the hon. Gentleman to talk about tax dodgers. I am well aware that there are such people. On the other hand, as he knows, there are many in the category of what could be called wage earners who do a good deal of work outside their normal working hours for which they are paid but on which they do not pay tax.

Mr. Diamond: The hon. and gallant Gentleman thinks that there is a fair comparison to be made between a man who avoids three-quarters of the appropriate amount of Estate Duty—running into tens of thousands of £s—by making appropriate arrangements and the worker who, having left work at 6 o'clock and gone home for his tea, then goes out and does an hour's gardening and gets 5s. and does not pay tax on it. I give the hon. and gallant Gentleman his point: that man should pay tax on that 5s. The other fellow should not be in a position to avoid Estate Duty almost completely. Surtax should not be a tax which, as everybody knows, is described as more or less a voluntary tax. These things should not exist. People should not make capital gains and get away with it scot-free. People should not be allowed to make capital gains on Stock Exchange transactions by the simple expedient, as the hon. Member for Torquay reminded us, of hanging on for six months and getting away with it scot-free.
These are things that the men at the bottom of the income ladder know, understand and remember. Until a Government come to power who are prepared to understand these things and act accordingly, we shall never advance towards an attitude of mind which is prepared to accept an incomes policy.

Mr. F. M. Bennett: May I interrupt the hon. Gentleman to make one thing


absolutely clear? I merely replied to a comment which was made early this afternoon by one of his hon. Friends when he was not, think, in the Chamber. The idea of holding a security for six months and a day was then put forward. I was commenting on the matter in the context of that remark, and not advocating it. The hon. Gentleman would do well to remember how the matter arose.

Mr. Diamond: Very well; the hon. Gentleman was commenting on it. However, it was a correct statement. It has been made dozens of times ad nauseam. All that a man needs to do to avoid paying speculative gains tax on speculative profits is to hold the shares for six months and one day. The hon. Gentleman, with his great knowledge of the Stock Exchange, says that that is what everybody does. We agree. We are obliged to the hon. Gentleman for his informed knowledge. That is why we have been trying to get the facts out of the Government. That is why the Government will not give the facts. They can get hold of all the information, but they will not give us the information to demonstrate what the hon. Gentleman says that everybody does.

The Financial Secretary to the Treasury (Mr. Alan Green): May I give the explanation, which I believe is well known to the hon. Gentleman, because of his expertise in practising in these matters? There is this difficulty of time under whatever system one proceeds to produce. Under either a short-term or a long-term capital gains tax—the hon. Gentleman knows this quite well; I respect him as a fair-minded man, as one who is very well versed in his own profession, and I believe that he will accept this—one has in fact to wait. One can guess at what may be the results of one form of capital gains tax. One must wait before one can get the real product of such a form of taxation. I am sure that the hon. Gentleman understands this.

Mr. Diamond: I do not know whether the Financial Secretary is making a point about the kind of tax or a question of figures. If he is dealing with the kind of tax, if there is a straightforward capital gains tax which assesses realised capital profits when they are realised,

there is no kind of encouragement to people to hold on for six months. It is no advantage to them to hold on for six months or a day, or for two years. They will sell their shares when it is natural for them to sell their shares, as they do in the United States, where they have had a capital gains tax for years and years, and take it as part of the normal course.
On the other hand, if the hon. Gentleman was dealing with the question of a delay in assessing, I repeat what I said before he entered the Chamber. This is a perfectly simple matter of analysing, cash receipts. The Revenue could say, "Cash has been received in respect of Schedule D tax. How much has been received in respect of Case VII under that Schedule?"

Mr. F. M. Bennett: On a purely personal matter, I must again reiterate that the hon. Member for Torquay, as the record will clearly reveal tomorrow, did not say that this is what everybody is doing. I in fact made no reference at all to what other people were doing. I was talking purely in terms of timing as to when tax returns would come in. Further, again on a personal matter, not only have I no great knowledge of the Stock Exchange: I have precisely nothing to do with it.

Mr. Dimond: The hon. Gentleman adds modesty now to his many other qualities. Some of my hon. Friends would treat the matter differently, but I will leave it at that. I must get on. I have been interrupted many times. I apologise to other hon. Members who wish to participate in the debate.
There are further things which the Government might well have done to help in establishing this kind of attitude. The first was to do the things they promised to do. That is not asking much. One of the things they promised to do as a Government was to bring in a Bill to deal with severance pay. This; was referred to in last year's Budget Statement. A specific thing which the Chancellor promised to do a year age—we have not heard a word about it—was to look into the question of tax law on severance pay and on any similar scheme, because the tax law might well have a deterrent effect on employers in the arrangement of


schemes which they might of their own volition wish to arrange. We have not heard a word so far about what the result of these inquiries is and whether there are to be any legislative proposals to ease the matter. The Chancellor might have made some reference to the Roots case, about which everybody is very concerned.
Finally, the Chancellor might have made some reference to an organisation about which I am very concerned—the F.S.M.B.S., the Foremen and Staff Mutual Benefit Society. This is an employer-sponsored organisation which gets foremen into its clutches and says to them, "We will give you a pension, to which we, the employer, will contribute, but if you dare join a trade union"—I make no bones about this. I am a member of A.S.S.E.T., the Association of Supervisory Staffs, Executives and Technicians, and am therefore competing with it—"if you do something so terrible as to join a trade union, you will lose all your benefits".
This is an employer-sponsored organisation for defeating trade unionism, and the sooner we get rid of things like that the sooner we will get a fair attitude and a complete understanding of the real problems facing people. Above all, the Government must be prepared to face the problem of controlling dividends, profits and rents. The sooner this happens the sooner we will all be able to get an attitude in which an incomes policy is possible in this country.

8.0 p.m.

Mr. Donald Box: I will not follow the hon. Member for Gloucester (Mr. Diamond) in all the points that he raised, although I will refer to his remarks about the capital gains tax. I pass through his constituency practically every time I come to London, so I was rather surprised to hear him apparently attacking the profit motive of industry generally because one of the largest and most affluent industries in his constituency is British Nylon Spinners Ltd., one of the show-pieces of the area.
One of the most important of the many achievements of the Government's economic policy has been the achievement of near-full employment. The level of unemployment in this country

is now under 2 per cent. as an average. When we recognise that that means that more than 98 out of every 100 employable people have jobs—most of them good and well paid jobs—we realise that that is a remarkable achievement. Since this is a national average—and, therefore, a generalisation—it is obvious that the figure includes some areas where there is high unemployment. We are all aware of that, but it follows that some of the other areas have virtually no unemployment.
Although this is a highly desirable state of affairs if there are no snags, it is generally acknowledged by the economists that such a high level of employment may in itself involve hazards. In other words, it may have a definite bearing on the problem of inflation. People generally, even the economists, differ on the degree that this may take, although it can be generally put in the terminology of the traffic lights—that when there is 3 per cent. unemployment the lights are at green, when it is 2 per cent., as it now is, they are very definitely at amber and are thus giving a warning, but that when it is only 1 per cent. the lights are flashing rapidly red for danger.
There are already reports coming from some parts of the country, notably the Midlands, that production is being held up through the lack of skilled workers. This in itself brings an additional danger of wage inflation. While a low unemployment figure, as we know from past experience, leads to a rapid rise in wage rates, so when unemployment increases those wage rates do not fall as rapidly as they rise. I hope, therefore, that the increased taxation measures in the Budget will be sufficient to contain these inflationary pressures and yet keep industry buoyant.
One thing is clear. Any future employment development—and this applies particularly to development districts—must be confined to areas where unemployment exists. If it were put into areas which already have a high rate of employment it would lead to a serious position, and we should soon be hearing about other parts of the country where production is being held up through the lack of skilled labour.

Mr. Loughlin: How would the hon. Gentleman ensure that the extension of


employment applies in the areas of high unemployment and not in those of general employment since the factory capacity for I.D.C.s issued by the Government has been greater in the areas of high employment than those of high unemployment?

Mr. Box: As far as I am aware, the Board of Trade has for some years been pursuing a quite tough policy in the granting of I.D.C.s to firms wishing to go to areas of high employment. It is anxious—and this was partly the purpose of the Local Government Act—to persuade and encourage industry to go to areas of unemployment. My right hon. Friend referred in his Budget speech to the favourable effect this policy was having on the North-East and some parts of Scotland.
Most people agree that it is better to endure higher taxation as long as industry remains active, confident and in an expansive mood. If we have lower taxation when it is not fully justified that, in turn, is bound to lead to a measure of inflation followed by measures to combat inflation—credit squeezes, and so on—and those, in turn, must have the effect of depressing industry and reducing employment.
The only sure way to contain the sort of inflation to which I have referred—and, at the same time, to maintain full employment—is an increasing awareness by both sides of industry of the advantages of automation. I therefore welcome my right hon. Friend's assurance that more incentives are to be given by way of taxation to industry to install modern equipment, these incentives being better than those given in any other country.
I am sure that were my right hon. Friend in his place he would agree that exports at their present high level represent the last thing we want to see interfered with in regard to the running of industry. I would go so far as to suggest that the "Shadow" Chancellor agrees—because time and again he has referred to the importance of exports—with this policy. One of the fundamental faults of hon. Members opposite is that they assume that the revenue from taxation will remain at its present high level if they are returned to power. That is a

fallacy and if they are returned and they start interfering with the running of industry they will find their tax revenue rapidly falling.
In the light of the remarks of the hon. Member for Cardiff, South-East (Mr. Callaghan, I cannot understand why the hon. Members opposite persist in insisting on renationalisation of the steel industry at this stage in our development, particularly since they cannot give one sound reason for wishing to do so. Even the most enthusiastic nationaliser—and there are some enthusiastic ones on the benches opposite—would agree that prices tend to rise when an industry is nationalised.

Mr. Bence: No.

Mr. Box: It is fair to say that prices in every nationalised industry have gone up substantially following nationalisation.

Mr. Bence: The hon. Member concludes that if we nationalise the steel industry it is a certainty that its prices will rise. Does he recall that about 18 months ago the Government advised Richard Thomas and Baldwins, which is a State enterprise, to acquire the equity stock of Whitehead's, the steel company of Newport? Has there been any rise in the prices of the products produced by Whitehead's since it was renationalised 18 months ago?

Mr. Box: The hon. Member is begging the issue. We all know that Whitehead's and Richard Thomas and Baldwins are not nationalised in the true sense of the word in that the Government have nothing to do with the day-to-day running of the business. We all know that when nationalisation took place the Labour Government acquired the shares and then in 1951 chucked in the towel. The Conservative Government came in and denationalisation took place.

Mr. Fernyhough: The hon. Member ought to keep up to date with his history. When steel was nationalised it was a Conservative Government who compelled the Chairman of the Iron and Steel Board to put up the price of the nationalised product when he said that it was unnecessary. He resigned because he was lot prepared to put up the price at he request of the Tory Government when he felt that it was undesirable and unnecessary to put it up.

Mr. Box: Regardless of that, the Government do not interfere with the day-to-day running of Richard Thomas and Baldwins.

Mr. Bence: They never did.

Mr. Box: They would if it were nationalised. As steel is such an important export in its own right and such an important component of many manufactured articles which are exported, I want to know how the increased cost which would inevitably follow the nationalisation or renationalisation of the steel industry would be avoided in the future. This industry has spent £1,500 million on modernisation and it will increase its output this year alone by about 3 million tons. What possible excuse, explanation or reasoning could there be, therefore, except for political dogma, for this sort of decision at this time?
The hon. Member for Dunbartonshire, East (Mr. Bence) referred to the industry being interfered with by the Government. But if hon. Members opposite are given the opportunity—and heaven forbid that they should have it—they intend to scramble this industry and to integrate it into one huge national steel board. All the companies which we know—and there are many which are internationally known—will disappear as such, because it is the intention of hon. Members opposite, if they have the opportunity—which they will not have—to scramble the industry to such an extent that it will be impossible for any future Government to denationalise it. Such a policy would be an unmitigated disaster for the industry, the workers, the shareholders, the export effort and the country as a whole.

Mr. E G. Willis: That is politically dishonest.

Mr. Box: I should like to know how it is dishonest. It is definitely the intention of the Labour Party, if elected, to scramble the industry beyond recognition in its present form. They have been given space by one steel company to set down some of the reasons for wanting to nationalise the industry and so far I do not think they have taken up the challenge.
Many hon. Members have welcomed the new incentive to savings which the

Chancellor introduced in the Budget. These particularly include the raising of the national savings limit, the introduction of the National Development Bond and plans to introduce contractual forms of saving. Most hon. Members agree that confidence in savings is paramount. That has been emphasised by a number of speakers today. I am, therefore, glad that there is no silly nonsense in the Budget about a capital levy or wealth tax. It would have been surprising if anything of this sort had come from a Conservative Chancellor. A wealth tax has been suggested by the hon. Member for Cardiff, South-East. I am sorry that he is not here. I expected that he would be here during the Budget debate. A wealth tax as he has suggested it is ill-conceived and, having been well-ventilated, has been universally rejected and—

Mr. C. Pannell: rose—

Mr. Box: —quickly buried.

Mr. Pannell: On a point of order. Why should the hon. Member make aspersions on the absence of my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) when my hon. Friend has been here far more often today than has the Chancellor of the Exchequer?

The Temporary Chairman (Sir Norman Hulbert): That is not a point of order for the Chair.

Mr. Box: The point which I was trying to make was that if I were to refer to the hon. Member for Cardiff, South-East it would be courteous to inform him beforehand, but I thought that he might reasonably have been here during a Budget debate. But I remember that he missed most of the Budget debates last year because he was in America.

Mr. Bence: But he has been here.

Mr. Box: The hon. Gentleman's scheme for a wealth tax was quickly buried as soon as it was found that it would attract no votes. When a previous Chancellor of the Exchequer wanted to raise £100 million, some years ago, he tried a different method. In 1948,


Sir Stafford Cripps imposed a once-for-all capital levy. This was levied on the unearned element of incomes over £2,000 a year. It meant that the first £2,250 of income was taxed at an additional 2s. in the £, and this ranged up to 10s. in the £ on incomes over £ 5,000. They were fairly generous at the time, because if one paid the amount one owed in advance one had a 2 per cent. discount.
During the debate on the 1948 Budget Sir Stafford Cripps said:
I recognise fully that regular taxation of this character would have a marked disincentive effect on savings, which is certainly not what we want."—[OFFICIAL REPORT, 6th April, 1948; Vol. 449, c. 72.]
I suggest that those words are as true now as they were then, for a tax on capital—and we are hearing a number of proposals for taxes on capital from hon. Members opposite—is a tax on savings, and as soon as the confidence of savers is shaken hon. Members opposite will find that the savings element in the country disappears very rapidly.
I do not want to make an issue of it at this stage, but I think that at some time in the future it will be desirable to raise the Surtax limit for investment income. As I understand, when somebody retires and receives a substantial pension on retirement, his retirement pension is treated as earned income. The position of someone who has worked in private practice or private partnership is very unfair. He may have saved and have invested those savings with the intention of living on the interest of dividends from the investments during his retirement. The present position seems anomalous, and I hope that the time will come when it will be looked at again.
Hon. Members opposite have referred several times today to the raising of the Surtax limit, but I have not heard one hon. Member opposite say that it is their intention to reduce the Surtax limit on earned incomes if they are returned to power. Several hon. Members have referred to the capital gains tax. I say categorically that this tax should be abolished because it is a bad tax. It is difficult to apply, it is a poor revenue raiser, it has a detrimental effect on the marketability of shares—I am referring to the capital gains tax on shares

—and, a point which many hon. Members have overlooked, it has produced a certain amount of short-term speculation. We can never judge the extent of this, and I believe that unfortunately, it probably applies to the smaller investor rather than to the larger investor. It is very difficult to assess exactly what is the proportion.
But I am quite sure that my right hon. and learned Friend the Member for Wirrall (Mr. Selwyn Lloyd), the Chancellor's predecessor, did not intend to turn us into a nation of tax dodgers. Unless investors are businesslike people, having to run an office or something like that, it is not particularly easy for them to keep a record of these profits, whether they were made within the period and what losses can fairly and reasonably be allowed against them. Moreover, it will be extremely difficult for the Inland Revenue to check up on people who do not return small amounts of capital profit in this way. Therefore, the revenue is a doubtful quantity, as we have heard today.

Mr. Diamond: We are still waiting to hear.

Mr. Box: We have heard that the revenue is probably very small, certainly after the losses have been allowed for; and it is it conceivable that we should have a tax of this nature without allowing loss relief—except, of course, under a Labour Government.
Again on the question of marketability, what hon. Members opposite are inclined to overlook is that, when a world calamity recurs, something which affects markets throughout the world or, perhaps, in one country or other, market prices fall very rapidly indeed. Whereas, in the old days, one used to get a certain amount of support from people who were willing to take a chance on a quick recovery in the market and look for a quick profit, this element of support has been abolished by the capital gains tax.
On the Stock Exchange, we refer to these days as "black Fridays" and black Mondays". I assure the Committee that it there will be plenty of black Fridays and black Mondays if Labour wins the next General Election, and even right hon. and hon. Members opposite may feel the need to have the support of


these investors to avoid violent fluctuations which, in a depressed market, can go on for quite a long time.
Perhaps it would be fairer to have a special low-rate capital gains tax on all capital gains, but this is a matter which must be very carefully investigated, and, obviously, this is not the time to discuss it. I recognise that measures such as this last one which I have mentioned have no place in the present Budget, but I hope that they will he tackled by a future Conservative Chancellor.
I welcome my right hon. Friend's measures, which are designed to maintain our industry at a buoyant level while avoiding inflation, but, for the reasons I have explained, I think that he must keep a very careful watch on the inflationary pressures caused by a low level of unemployment.

8.23 p.m.

Mr. Charles Loughlin: Having listened to most of the debate today, I have been coming increasingly to the conclusion that the Chancellor of the Exchequer, whether he be a member of the present Government or a member of the next, which will be formed by this side of the Committee in a few months, has a terrible problem to face. According to hon. Members opposite, it is impossible to tax profits, to tax dividends or to tax rents. If we are to accept the statements of hon. Members opposite about the intense danger of inflation, the only way to solve the problem is to ensure that the workpeople do not have increases in wages.
We can, by any method it is possible to devise, keep down the living standards of our workpeople, we can ensure that the Chancellor of the Exchequer will be free to determine that there can be a 3 per cent. or 3½ per cent. increase in wages as a whole, we can ensure that the Chancellor, after there have been freely negotiated wage increases for workpeople, can decide that such increases will not apply, we can use any method we like to ensure that inflation does not stem from rises in wages, but we cannot possibly use any method at all to deal with profits, dividends or incomes of that kind.
The hon. Member for Cardiff, North (Mr. Box), apart from being completely unfair to my hon. Friend the Member for

Cardiff, South-East (Mr. Callaghan), talked about what we are likely to do when we got power at the next election. He said that he was opposed to nationalisation in all its forms. But he believes in nationalisation, and so do his right hon. Friends on the Front Bench. They have been in power for 12 years, with complete control, and no question of a majority of six, but they have not denationalised the coal industry.
If a man does not believe in nationalisation, if he is opposed to it on principle, as the hon. Gentleman says he is and as right hon. Members opposite so often do, he should put that principle into effect if he has power. People who oppose nationalisation on principle should not say, when they have power, "We will denationalise steel"—they made some attempt to denationalise steel—"we will denationalise road haulage, but we will not denationalise coal, the railways, gas or electricity".

Mr. Box: The answer is quite simple. If one tried to denationalise coal or the railways, supposing that there were the desire to do so, where would one find the people to invest their savings in industries which are losing millions and millions of £s?

Mr. Loughlin: This is a question of principle. The hon. Gentleman is opposed to nationalisation. In that case, he should propose denationalising industries. Let us assume that we cannot denationalise the railways and coal. It would have been interesting if the hon. Member had stated the amount of money paid to the railways just a year before the vesting date. About £60 million was paid out of the public purse. But, if we cannot get rid of those industries because we cannot get someone to take them over, what is wrong with the gas and electricity industries? We do not have the same problem there. They are making profits. Why not denationalise the Navy? This is the oldest nationalised industry that there is.
I much prefer to deal with one other point which the hon. Member made. He said—and I agree with him on this—that the major danger is inflation. He refers to it as wage inflation. Perhaps I can remind him of the part of his speech in which he dealt with this subject. He said that any increase in employment


must be in the areas where there is unemployment. He saw automation as the solution to the problem of inflation through increased wages. Does he mean that he and his party want to deal with the possibility of wage inflation by the introduction of automation into industry to create sufficient unemployment to ensure that there is a sufficiency of people whom employers want to employ and so that the workpeople cannot bargain for increased wages? This is the only inference which I can draw from what the hon. Member said.

Mr. Box: The hon. Member is not as naïve as all that. He should know that, in this day and age, mechanical handling equipment and automation in all its forms invariably increases the employment opportunities, gives higher wage rates, increases production and allows the industry, because it is more prosperous, to pay better wage rates to its employees. There is no question of trying to increase the pool of unemployment by introducing automation.

Mr. Loughlin: When the hon. Member looks at his speech tomorrow and sees the connection between the part dealing with employment and the part dealing with automation, he may change his mind about the inference which can be drawn. However, I do not even accept his statement that automation will create more jobs, because the principle of automation is the elimination of labour. Our problem in 10 years will not be to deal with inflation. It will be to find jobs, unless there is a substantial decrease in the hours of work.
We cannot deal with the problem of an incomes policy solely on the basis of a wages policy. This is a problem which this Government and the next Government will face. I know that the N.E.D.C. has experienced difficulties in trying to formulate an incomes policy. It is no good hon. Members opposite talking about a wages policy because, as a trade union official, I can tell them now that that cock will not crow. Even if it is conceded that inflation stems directly from wage increases—I do not necessarily accept that—the only way that we can deal with it is by convincing the people in the factories and commerce that, if there is to be any restriction on their earning potential, it will apply with some degree of equity

throughout the income groups. This will not be easy.
The hon. Member for Scarborough and Whitby (Sir A. Spearman) said today that the only way is to relate increases in incomes to productivity. I have heard this said time and time again. Those who use this expression usually say it with a degree of expertise that surprises me. I do not know how it can be done. In the context of a national in comes policy, I do not know how we can decide that workpeople shall have incomes in relation only to their increased productivity.
How do we do it? Do we do it on an overall national figure? Do we say that if the national increase in productivity is 4 per cent., everybody in the community will get a 4 per cent. increase?

Mr. Green: No.

Mr. Loughlin: I am grateful for the remark of the Financial Secretary, even though he speaks from a sedentary position. I want to know how far the Government have examined the whole issue of attempting to institute an incomes policy, particularly for wages, assuming that they are first prepared to apply an incomes policy fairly throughout the whole community.
As the hon. Gentleman has already replied to one of my points, I should like him to give a little attention to this. If we do not apply an incomes policy on the basis of a national productivity figure, it is to be assumed that it is applied on the basis of either an industrial figure: or a figure industry by industry or firm by firm. It is fairly obvious that it cannot be applied firm by firm, even though we have wide ranges of firms and local negotiation. But how do we apply it with equity if it is applied industry by industry? Is it that the Government advocate full participation in production by both workpeople and management? Whilst there is a facade of this in some aspects of industry, it does not really apply and we cannot restrict any section of work-people to an increase in wages related solely to the increased productivity unless the workpeople in the industry are able in large measure to determine what the productivity will be.
Increased productivity stems in many instances from management policy in relation to the horsepower of the machinery to the unit of labour. If it is to be said that the policy can apply only in the industries where productivity has increased and that wages can only be equated to or be below the total increase in productivity, this means that where there is a failure by management to introduce better and more up-to-date machinery or failure in any other direction, the workpeople shall suffer in consequence of the failures of the management.
What do we mean by linking incomes with productivity? Let us take, for instance, a five-year cycle, and let us take the National Coal Board. The Coal Board has pursued a policy of increasing its productivity largely on the basis of capital investment in modern, up-to-date machinery. If the Coal Board, for instance, over a five-year cycle, increases its productivity in the first or second year of the cycle, the coal miners—the employees in the industry—can have increases in wages, but it is reasonable to assume, if there are substantial increases in productivity in the first two years of the five-year cycle, that it is improbable that there will be anything like the same degree of increased productivity in the last three years of the cycle. It seems to me, to say the least, that the workpeople in the coal industry—it can be any other Industry—are entitled to wages increases in the two years when the machinery is being introduced and productivity is increasing, and then they have to stand by the status quo for three years—and possibly longer, because it may well be that the tempo of change in the machinery required in the industry needs to be over a longer cycle.
These are questions which the Chancellor of the Exchequer really ought to be looking at at present. What is this incomes policy? We in the trade union movement want to make it perfectly clear, and we make it clear to this Government, and we make it clear to the future Labour Government. We underline it to the future Labour Government, because we believe that there is a greater chance of getting equity in incomes under a Labour Government

than under this Government, as experience of this Government proves.
As a trade union official I have always advocated the desirability of increasing the economic stability of any works or undertaking in which my members have been employed. I have done that because, obviously, continuity of employment is of vital importance to my members, and my members can get reasonable standards, under the present system, only as long as the factories in which they are employed are economically stable. We have argued time and time again, sometimes in the face of resistance on the part of employers, for the need to increase productivity by the introduction of more up-to-date machinery and by the introduction of methods and works studies. We have made many sacrifices in some of the practices which we have been able to apply over the years so that we could increase productivity.
The Chancellor of the Exchequer cannot, however, expect us to tell our members that there is some vague concept that they can have wages increases in accordance with an increase in productivity and that, somehow or another, if we wait long enough, the pattern of this will work itself out and then we shall see it. Why not? Because we are dealing with human beings; we are dealing with people who know, as my hon. Friend the Member for Gloucester (Mr. Diamond) said, that if wages are restricted, then profits will increase.
We also know that unless there is a definite restriction on profits and dividends we cannot possibly persuade trade union members to pursue a policy of wages restraint. What does the Budget do? Does it deal with this question? The Chancellor himself referred to the question of the impact of inflation and the danger of workpeople having too great an increase in wages. All along the line hon. Members opposite have made reference to a wages or incomes policy. But we have still to hear from the Chancellor how he hopes to implement it. The employers have said that they want no part in it if it means any Government interference in profits and dividends. The policy of the Government has been such as to ensure that landlords have had a more than large slice of the national cake.

Mr. Bence: Landowners, too.

Mr. Loughlin: In the 12 years that the Conservative Government have been in power, all sorts of people have managed to live in comparative luxury and get away with murder. If in his Budget the Chancellor clearly indicates that he is not prepared to deal with those who are getting away with speculative capital gains, not prepared to deal with those who are holding the community to ransom over land, and not prepared to take any action about the spivs and racketeers, he cannot expect the trade union movement to accept any policy of wage restraint.
It may be that the right hon. Gentleman proposes to pursue a policy based on the market. I remember his saying that with wages it was a matter of how much employers were prepared to pay. This applies equally to any other commodity. Workpeople are merely selling a commodity—labour power. If the Chancellor argues that the market should determine the rate, then we have as much right to go for the maximum wages in a free market as the man who wants to sell land or any other commodity.

Captain W. Elliot: The hon. Gentleman has been dealing at length with profits and wages. I am sure I am right in saying that a good many hon. Members opposite, as well as hon. Members on this side of the Committee, believe that the higher the profits from an industry the better the chances of getting higher wages. Would not the hon. Gentleman agree that the real battle, if he wishes to see one, is over the division of profits and not over profits themselves?

Mr. Loughlin: I appreciate that point but it is not the issue. It is not a question of my having a personal bias against profits or dividends. I do not argue that they should be high, but that is immaterial to my point, which is that if there is to be restriction either by exhortation or by interference—as there has been in the last two years—then such restriction must not apply to wages only but to profits, dividends, rents and other incomes as well. That is the simple issue.

Captain Elliot: The answer is not in limiting the profits. If a business is efficient, the higher the profits the better.

Mr. Loughlin: It may well be that the greater the degree of profit the better it is for all concerned. I will not accept that but it may be so. But I repeat that it is not the point at issue. Under the guise of an incomes policy there has been exhortation for wage restraint but one cannot in justice, ask for an incomes policy for wages alone. Sacrifices must be sought of every one. One cannot ask it of the working people alone.

Mr. E. Fernyhough: Would not my hon. Friend agree that those firms which distribute high dividends should have their case taken to the N.I.C. just as the building workers did?

Mr. Loughlin: If one accepts the principle of the N.I.C., which I do not, it seems only common sense that, if one refers to it a wages claim that would give a man an extra 15s. a week, then a rise in dividends—possibly including scrip issues to make them higher still—should be treated as wages are treated and be sent to the N.I.C.
The working people will not have this situation. Dividends deferred means that they still come to the holder. But wage increases refused under this system are lost for ever, not deferred. The trade union movement will not accept a system whereby dividends are deferred—indeed, under such a system there is often a substantial capital gain—while wage earners lose money for good. I hope that, if he accepts nothing more, the Chancellor will accept the need to demonstrate: that, if an incomes policy is cardinal to the solution of our future economic problems, he is prepared to give an assurance that he will consider solving them on the basis of an incomes policy which applies throughout the community rather than only to the wage earner.

8.56 p.m.

Mr. Rafton Pounder: I am indebted for this opportunity to speak very briefly in this debate, on the first Budget which I have had the privilege of hearing since entering the House of Commons.
Listening very attentively to the speeches of hon. Members opposite, I found one point in one speech on which I wish to focus momentary attention. I regret that the hon. Member for Gloucester (Mr. Diamond) is not present,


because he and I have one thing—and, so far as I could gather from his speech, only one thing—in common. It is that we are members of the same profession. I was alarmed at the detailed list of tax dodges which he outlined. I cannot help feeling that if he and I think alike as accountants, and I am sure that we do, it is his professional duty to inform the appropriate authorities of these matters and not make party political capital out of them.
Last year, my right hon. Friend the Chancellor of the Exchequer gave a most welcome and in many ways successful stimulant to areas of above average unemployment by means of the introduction of tax incentives and other financial assistance. Let there be no mistake: these areas have benefited substantially from the stimulants. Until last year, Northern Ireland afforded unrivalled incentives which are now afforded in limited measure to all development districts of the United Kingdom, but I shall not adopt a dog-in-the-manger attitude. The fact is for all to see—that unemployment in all these areas has fallen substantially in the past 12 months, and I am delighted that the Chancellor of the Exchequer has not found it necessary to curtail any of these financial inducements in the current year. I cannot speak for other areas apart from Northern Ireland, but if they are doing as we are, the free depreciation scheme which my right hon. Friend introduced last year has worked extremely successfully.
I wonder whether all the development districts are necessarily sharing sufficiently in the overall picture of national expansion. It is equally questionable whether Government priority in placing Government contracts to these areas is being sufficiently operated. I welcome that no restraints have been put on the development districts by this year's Budget, because, although restraint could easily have only a minor effect in south-east England, it could have a considerable effect upon the development districts. Obviously, any Ulsterman, Scotsman or Tynesider, to mention but three, would take considerable exception to any measure which adversely affected his area.
However, I wonder whether my right hon. Friend's policy is sufficiently flexi-

ble to protect development districts from disproportionate effects of any retrenchment. It is very easy to introduce a national blueprint which will have the effect of moderating growth in one area and, at the same time, check it altogether in another. Blanket policies which take no account of regional needs may be easy to administer, but ease of administration should not be the criterion of their introduction.
I have believed for a very long time in the principle of self-help and I was glad that my right hon. Friend introduced National Development Bonds on lines very similar to the Ulster Development Bonds, introduced a couple of years ago, thereby giving the people at home the opportunity to have a stake and share in the economic development and prosperity of their own area. I trust that the National Development Bond will be even half as successful nationally as our own were locally. I suppose that it is a case of where Ulster leads, England follows. There is one purely financial development which is welcome, and that is that these bonds are redeemable at par at one month's notice.
While on the subject of Government securities, I wonder whether it would be possible for my right hon. Friend to introduce a minor, but valuable administrative, alteration, namely, to enlarge the size of the dividend voucher of Government bonds. At present, Defence Bond vouchers are approximately the same size as Post Office postal order counterfoils, and it is very easy for them to be mislaid.
I notice the hon. Member for Sowerby (Mr. Houghton) looking at me. When the time comes for an Income Tax payer's annual return, or, alternatively, for his repayment claim form, to be submitted, very often these vouchers cannot be found. If it is not an impossible administrative task, perhaps some thought could be given to enlarging the size of the counterfoil.
There is one other point that I wish to make, particularly because of my interest as an accountant. I am referring to the point made by my right hon. Friend when he dealt with tax reform. I await eagerly the publication of the promised White Paper incorporating his thoughts on this subject.
No new headaches have been provided for the practising accountant. He has been given another year in which to digest Case VIII without further indigestible matter being put his way.
I note with interest the idea of placing the taxation of company profits fort Income Tax purposes on an accounts basis in the same way as is at present applied for Profits Tax, but I reserve judgment until the White Paper is published.
Any reform of the taxation structure is superficially welcome, but is it to be inferred from my right hon. Friend's statement on this subject that capital allowances will be apportioned over the relevant tax years which are covered by the accounts period, in the same way as they are for Profits Tax? I raise this point because of the considerable volume of additional administrative work which would be involved in so splitting, capital allowances. At the moment, the job is not too difficult because not every company pays Profits Tax. Income Tax, however, would be a different story.
I conclude by asking my right hon. Friend whether he will consider introducing a tax system whereby companies pay tax during the period in which the profits are earned, that is to say, a pay-as-you-earn idea for companies as well as for individuals. Considerable difficulties have been caused by companies paying tax on a preceding year basis, when they would hardly have noticed the draught if they had paid them in the year in which they were being earned.

9.3 p.m.

Mr. Ray Gunter: I am sure that the Chancellor of the Exchequer will be a little surprised if, after all that has been said during the last four days, I draw attention to that part of his speech with which I concur. The tragedy of the debate is that we have not had from the Government a full analysis of the question of an incomes policy. Referring to the desirability of such a policy, the right hon. Gentleman said:
I intend to persevere, because in my judgment a solution to this problem would bring economic benefits to our people that would dwarf anything else that we could achieve."—[OFFICIAL REPORT, 14th April, 1963; Vol. 693, c. 264.]

Earlier in his speech he said that the main problem was to know how to translate unexceptional general principles into effective practice, and that is our problem.
I believe that we must have an incomes policy. If the Government, employers, and trade unionists could find a solution to that problem it would be worth more than all the speeches that have been made by hon. Gentlemen opposite about our standards of living and about what the Tory Government have done, because I believe that with all our prosperity, alleged or otherwise, and in spite of what is said about rising standards of living, they are not so secure as some people imagine. Unless we can hold the cancer of inflation, it may well be that in the not too far distant future we shall find ourselves in considerable difficulties.
We all appreciate the desirability of an incomes policy. Sometimes I listen with awe to the economists. I listen with a lack of understanding to some of the brilliantly educated men in this Committee. All I know is that this is something that my mother always knew. I know that if we spend more than we earn, that if we continue to follow that path, eventually, to use the miner's language, we shall have the bums in.
That is what an incomes policy is about. That is what we are trying to get at. It is rather a pity that, particularly today, more of the speeches, including that of the Chief Secretary, have not been directed to making the Committee aware of the real problems involved in an incomes policy. Before we can arrive at an incomes policy we must make the country aware of the real problems and then try to find a solution of them. Peeping through almost every speech of hon. Members opposite has been the suggestion that it is the wicked trade unions alone that hold N.E.D.C. back from the formulation of an incomes policy.
We have had that condemnation implied by the Secretary of State for Industry and Trade who jibed at my right hon. Friend the Leader of the Opposition about why he did not talk to his friends on the T.U.C. about art incomes policy. We have had no similar words of condemnation of the attitude of the Federation of British


Industries in this matter. It is, therefore, entirely wrong, when we are seeking to understand these problems, to place the blame entirely in the hands of the trade unions.
Let us first be clear where we stand about the attitude of the employers. I am not at all moved by some hon. Members who say that it would be quite wrong, a sin against the Holy Spirit, if we attempted to control or to limit profits. If that is undesirable at the places where they are made, it is the duty of the Government to do it here. That is what we are talking about.
I suggest that the Federation of British Industries has been a lot more honest than the Tory Party. The Federation of British Industries has said in effect, "We want nothing to do with profit limitation. We are not prepared to have anything to do with the control of profits, directly or indirectly". It says, "We operate under private enterprise and the standards of private enterprise demand that the profits are as high as we can make them", without regard for the welfare of the nation. That is what private enterprise is all about—profit is the motive. The hon. Member for Cardiff, North (Mr. Box) made a speech but did not deal with the real problem. The Federation of British Industries is at least honest. It says that what the Government want is a wages policy. What it wants is wages restraint. It is a logical deduction of the Federation of British Industries. It says that 75 per cent. of the income is derived from employment income and therefore why bother about the other 25 per cent.?
The real difficulty and dilemma of the Tory Party is that, while it puts up the facade of an incomes policy embracing every section of the nation, what it really desires is a wages policy. This is the dilemma that arises from their philosophy. The right hon. Member for Wolverhampton, South-West (Mr. Powell) knows this. The real philosophy of the Conservative Party is to let profits range as they will. What they are seeking is a restriction on wages. The impression derived from the F.B.I. report on prices and profits is that employers do not consider that profits should be interfered with directly or indirectly. It puts forward the idea in its own document that profits are the

flywheel of the economy, and that high profits are the reward of investment. It is more honest than is the Government Front Bench.

Sir Douglas Glover: In my opinion the best speech delivered in this debate was that of the hon. Member for Middlesbrough, West (Dr. Bray). Dealing with an incomes policy, he pointed out that £3,000 million is taken by way of dividends and profits and rents;£5,000 million is taken by those who are earning less than average incomes and £15,000 million is taken by those who earn £16 and upwards a week. He pointed out that if we are to have an effective incomes policy it is with the latter band of incomes that we have to deal. He put forward the most constructive argument that there could be short-term variations in P.A.Y.E. I wonder whether the hon. Member for Southwark (Mr. Gunter), who has no doubt read the speech of the hon. Member for Middlesbrough, West, would care to put forward some constructive proposal on this theme. If so, I would support him.

Mr. Gunter: Give me a chance! I am still working up my argument. I repeat that the F.B.I. would welcome a wages policy. It makes it clear that ways of exercising discipline on prices and profits were examined by it, because such a discipline is necessary from the standpoint of sustained economic growth, but that in its view any such measures would have to be matched by trade union agreement to restrain wage demands. The F.B.I. certainly has no convictions about the desirability of an incomes policy.
I hope that when the Chancellor next goes to the N.E.D.C. he will take note of the fact that the Federation did not treat his favourite instrument with the courtesy that I would have thought it demanded. The Federation did not submit the question to N.E.D.C. before publishing its report. I foresee some difficulties in any further consideration of this matter in the N.E.D.C., because the position has already been jeopardised. If the Federation considers that no useful purpose is served by bargaining with the trade unions on this issue, because it does not think that an incomes policy is necessary, and if the Government go on believing that an


incomes policy is necessary, they will have to make it clear that statutory action will be taken on the question of prices and profits if they are to have the co-operation of the trade unions.
The Budget provided the opportunity for that. It could have contained measures which would have alleviated the concern and worry of the trade unions. Let us lay the bogy that it is only the wicked trade unions which stand in the way of an incomes policy. The Federation has said dogmatically that it wants nothing to do with such a policy. It is no good jibing at the trade unions in such a situation. That caution is due to the fact that we have a Tory Government and we have every reason to watch very carefully—I speak of the trade union movement—any action of a Conservative Government.
A Tory Government is dedicated to private enterprise whose members, deep in their hearts, believe—whatever the Chancellor might say—that the Federation of British Industries is right. The events of the summer of 1961 are stamped vividly in our memory. When the Chancellor implores the co-operation of the trade unions and the employers with him to set out on the wonderful path of discovering an incomes policy, we remember that it is something less than three years since the present Leader of the House did something of which in a sense he was a little unconscious.
When all the history of this period is written and Profumo is forgotten and the battle for the leadership is forgotten, I have an idea that the tragedy of the Tory Party will be seen to date from about 5th July, 1961. Then the Conservative Party revealed what it meant by an incomes policy. At that time, without any consultation with the unions or the people affected, the Chancellor imposed a pay pause—only, of course, for those involved in industrial negotiations. There was no pay pause for the profit-maker.

The Lord Privy Seal (Mr. Selwyn Lloyd): Profits at that time were sharply falling.

Mr. Gunter: I know the statistics. I am talking about the attitudes. The attitude of the right hon. and learned Gentleman at that time was that, with-

out any regard to other sections of the community, it was the trade unionists who had to pay. Further, why we are suspicious is because at that time freely-made agreements were infringed. The Government's miscellaneous rates workers were repudiated and they even struck at he nurses. From that time we have had the deepest suspicion of any effort to deal with an incomes policy in justice and in equity. The bitter resentment of the Trades Union Congress in its debates in September last when it opposed wage restraint was not an attitude against a considered and proper incomes policy; it was a recalling of that period when free and full arbitration was destroyed.
I want to ask a question at this point. If the Federation of British Industries can take up this attitude and the party opposite can take it up on the Budget, why do they expect a different standard of conduct by trade unionists? If the manufacturer and the industrialist demand the right to make the highest profits possible—which may be justified, I am not arguing the merits of the case—why is it not equally right for other members of the community to say, "If these are the standards of conduct, we are a part of the whole, so why cannot we participate in getting what we can by our industrial strength?" I therefore say to the Chancellor tonight that, if the income; policy which is so desirable is to be obtained, if we are to have policies that can direct our attention to the proper paths, the first thing that has to be done is to restore the faith of the ordinary workman in the belief that justice and fairness will operate in this place.
That does not solve our problems. I started by saying that an incomes policy was desirable, otherwise we would get into trouble. I say a word to some of my trade union friends on this matter. They are involved in this in their own particular way, not only in opposition to the owners and to management but in formulating policies among themselves which will give greater fairness and equity to all the workers of the country.
It is desirable at this time that the trade unions should have regard to the changing pattern of industry and to the different processes of wage fixing which will be necessary in future. It is a repudiation of all that we believe in and


had hoped for in the trade unions for a trade union leader in a prosperous industry to say that he will get his own pound of flesh, regardless of his responsibilities to other workers, particularly those in the service industries. We must look at this point in the light of fair dealing to all our people.
There is another factor that I ask some of my trade union friends to have regard to. I suppose it is not much use asking hon. Members opposite to pay regard to this. I refer to the dangers of continuing on the present path and conducting open warfare on the wages front. The enemy is inflation, and today we inside the trade union movement are bound to have regard to those who have no protection, those who cannot protect themselves.
I have an interest in many superannuation funds as a trade union leader. One of the shocking things about the state of some of my people is that some of those who 15 or 20 years ago, if not more, retired on what at 1938 values was a good pension would have been better off had they not paid a penny into a superannuation fund and gone on National Assistance. We are bound to have regard to the many professional people and white-collar workers who have not the great battalions behind them to defend them. We in the trade union world at present, in the pursuit of an incomes policy, are bound to have regard to the well-being of the whole country.
I say to the Chancellor of the Exchequer that there are many friends of his in the trade union world who would be quite prepared to help him in this battle for greater equity on the wage front and on the income front. There are many thinking trade union leaders who understand that, if this naked, ruthless battle goes on, in which success is to the strong only, we can land in serious trouble. It will not be serious trouble only for those involved in the battle. It will bring casuals among those with fixed incomes and those who cannot protect themselves.
I want now to say a word to employers. I do not think we shall get very far if the general attitude of the Federation of British Industries is to be carried. I cannot believe that the best in the Conservative Party will agree with the atti-

tude that restraint can be imposed upon wage earners, and that it is desirable that it should be so imposed, while nothing is done about the other sections of the community. This simply will not work. I tell the Chancellor here and now that his hopes for an incomes policy can be forgotten, unless we can have justice for our people and unless we can create the atmosphere of fair-mindedness. I cannot believe that the Chancellor in his deliberations with the N.E.D.C. will do any other than reject the outlook of the employers.
One of the great things we must do in trying to achieve this most difficult objective is to create the right atmosphere. We must get people to understand that a Government are determined to play fair and give justice to all sections of the community. That is what we have failed to do. Only the Government can do it.
The creation of this atmosphere is the duty and responsibility of the Government. I had hoped that in the Budget the Government would have dealt with some of the problems. I had hoped that there would have been a forthright attack, as my hon. Friend the Member for Gloucester (Mr. Diamond) said, upon the land speculators, upon those who thrive and work not, upon those who live so liberally upon expense accounts.
The Chancellor may argue that these things add up to very little. They are certainly important in the minds of the ordinary working people. We will never achieve an incomes policy unless the ordinary people are convinced that there will be fair dealing.
One of the greatest changes that has taken place is the unwillingness of the ordinary people to accept what used to be regarded as their allotted place in society. There is a demand for greater equity and fairness, and it is only if the Government enforce their will to ensure that justice is done that we are prepared to participate in talks about an incomes policy. The suggestions made by my hon. Friend the Member for Cardiff, South-East—many of which have been jibed at by hon. Members opposite—were relevant to the creation of this atmosphere. Equally, my hon. Friend the Member for Sowerby (Mr. Houghton) was speaking about the creation of the right conditions in which the unions would be willing to collaborate with the Government.
Despite this, there has been nothing at all in the Budget to indicate to us that the Tories have the possibility of escaping from their dilemma. That dilemma is that they do not really believe in an incomes policy. What they want is a wages policy. There can be no such thing. There is no hope at all of us in the trade union world agreeing to participate in the creation of an incomes policy unless we can be assured that it embraces every section of the nation and that if there must be sacrifices and burdens they will fall on those who are best able to bear them.
Those who come from the class from which I come—if one cares to refer to it as such—are sometimes affronted by certain aspects of the affluent society. I am not suggesting that there is anything wrong with an affluent society. Some of us have spent our lives striving for better conditions and material prosperity for our people, but there are still elements in our society which are an affront to some of the working-class people. There is still too great a division between those with wealth—which so often they have never earned—and the many millions who are still below the £10 or £15 mark.
The Budget debates have, I believe, demonstrated to the nation that if the Government had demonstrated their belief in social justice and a more equitable distribution of the nation's wealth, the trade unions would have been happy to participate. However, as long as their present attitude continues and as long as there is no indication from the Government that they appreciate the dilemma of the trade unions in this matter, the Government can create as many N.E.D.C.s as they like but they will get nowhere. The Government of any country are the instrument to create the atmosphere in which people will agree to arrive at an effective incomes policy; and the Chancellor agreed in his opening speech that this was essential to the future wellbeing of the country.

9.29 p.m.

The Chancellor of the Exchequer (Mr. Reginald Maudling): The hon. Member for Southwark (Mr. Gunter) devoted his speech to incomes policy. I am glad that he did, because I share with him the view that this is the most important of all the

economic issues before us. I agree with much that he said, but I am sorry about some of the things which he said. It is not a question, as he suggested, of anyone trying to put the blame on the "wicked" trade unions. Everyone understands the very great difficulties of trade union leaders in trying to promote, as they honestly do, a sensible attitude to incomes. I well recognise that they can remain helpful to the country only as long as they remain leaders of their own people. I understand that well.
On the other hand, the hon. Member was less than fair to the Federation of British Industries, because members of the Federation have put forward suggestions, and they have played a full part in N.E.D.C. I cannot disclose the detailed proceedings of the Council, but I can tell the hon. Member that I will blame neither the employers nor the unions for the fact that we have not made further progress up to the present. I am disappointed that we have not made more progress, and so is everyone else who has the interests of the country at heart, including, I am sure, the hon. Member for Southwark. I do not think that we can make any useful progress by trying to put the blame on one side or the other—and the hon. Member probably agrees with me in that.
The question of an incomes policy is fundamental. I start with that proposition, and with the proposition that if we intend to increase the real wealth of the country and the real level of incomes as fast as possible, which is our purpose, then we must keep the growth of incomes in line with productivity. This, I think, is accepted. But it is not a problem which can be solved by Government action alone. I disagreed with the hon. Member when he talked about statutory action to control prices and profits and said that this was essential. Not only is it not essential, but I think that it is quite unworkable. I do not think that it can be done, and I believe that the Leader of the Opposition has himself said so in recent times.
In a completely socialised or communised society we could have Government control of prices and of wages by diktat. But this is not the way in which we shall do it. The alternatives to controls which the Government do not want to exercise, and which no one else wants to exercise, are either to try to pursue


the sort of incomes policy which we are trying to pursue or, if this is unsuccessful, to control inflation, as it must be controlled, by measures which will contain and hamper expansion—and this is precisely the alternative which we all wish to avoid. The hon. Member is quite right in saying that the enemy is inflation.
We will not have Government dictation of wages and prices. We do not want Government policies which hold back expansion. We must, therefore, agree on an incomes policy which enables expansion to take place without inflation. It must rest with the unions and with management to play their part. If the unions are determined to use their full power and if managements are determined to exploit their full opportunities, then, as I said in my opening speech, I do not see how we can solve this problem. I think that most hon. Members accept that. The problem in human terms is always, "What about the other man? Supposing I do the right thing, supposing I am restrained, supposing I am modest in my demands, what about the other man?". This is the human problem which we must all recognise and try to solve.
It falls into three categories: the comparison of wages and profits; the comparison between wages and wages; and the comparison between profits and profits. All these we must try to solve. We have heard many figures about how wages and profits have risen in recent years. It is fair to point out that over the period 1952–62, the best comparison can make, there has been very little change in the comparative share of the national income taken, on the one hand, by profits and, on the other, by wages and salaries. Wages and salaries are slightly up, but not enough to make any great statistical difference. Profits have been rising during the immediately past months, but they fell in 1961–62 and they have only recently begun to catch up with the point which they had reached in 1960.
We must look at these facts objectively to get a reasonable attitude. The Government have said—and they stand by this undertaking—that if restraint on the part of wage and salary earners led to an undue increase in the total level

of profits, we should, by fiscal or other means, restrain that undue increase. That is the undertaking. We think it right that all forms of income should fall into the same policy, and by that undertaking we stand.
Secondly, there is the comparison of wages with wages. This is tremendously important, because, whatever may have been said in the debate about the effect of the cost-of-living index on wages, which is, I think, much less than it was, it is the comparison which matters. The essential thing is to get a system whereby one can give the exceptional case—for example, the university teachers—exceptional treatment without allowing this to become generalised and so undermine everyone else's position.
This is why I say, once again, to the trade union movement that it should look at the National Incomes Commission for what it is and look at what it is trying to do. Is it not, as I believe it is, designed to protect, and effectively doing the job of protecting, people who cannot protect themselves by ensuring that the exception has the treatment which it merits?
Turning to the question of profits, there is the problem here that, while, by and large, wages should be uniform throughout a given industry or occupation, profits must never be uniform either in point of time or as between one firm and another. We want the greatest possible disparity between the efficient firm with high profits and the incompetent firm with low profits. Therefore, we want a system which will enable the total level of profit incomes to be in line with our incomes policy, without restricting or hampering in any way the efficient firm in getting the benefit of its efficiency.
These are the problems of an incomes policy. They will take a long time to solve. Every country in the Western world is grappling with them. We shall not reach a perfect solution for a long while, but, in the meantime, cannot we try? In N.E.D.C. the Government have made quite clear that they regard their responsibility as twofold: first, to maintain the tempo of expansion at as high a level as can be achieved—that is the purpose of the Budget—and, secondly, the undertaking which I have already referred to about the general level of profits.
I believe that this is accepted as the right sphere of responsibility for the Government to take. It now rests with the unions and management to join with us in an effort not simply of logic or reading off a blue print, but an effort of will and determination to see that we get the sort of agreement on incomes policy which, and which alone, can enable us as a country to realise the glowing possibilities which now lie before our people.

Mr. Gunter: It is very nice of the right hon. Gentleman to say what he has, but the point I was trying to make was that the Federation of British Industries, a very powerful body of employers, has said that it will have nothing to do with it.

Mr. Maudling: I do not want to be drawn on this. I do not want to say what the trade unions have said, or what the F.B.I. has said. I am concerned to try to get agreement, not to spread the area of disagreement, and I think that I am right in my approach. If we have not got agreement let us—

Mr. Loughlin: We cannot get it if one side refuses.

Mr. Maudling: We cannot get it if both sides refuse. But the Government intend to persevere and try to get it.
I turn now from the incomes policy question, the main burden of the hon. Gentleman's speech, to the Budget and to some of the criticisms which have been made of my Budget proposals, mainly criticisms made outside the House, because, frankly, the Opposition's case against the Budget has been singularly feeble and ineffective.

Mr. Loughlin: The Budget was feeble and ineffective.

Mr. Maudling: £100 million of additional taxation is a substantial amount.
There are two tests of any Budget: first, whether the total amount raised in taxes is right; secondly, whether the method is right. I do not think that any responsible critic has argued that I should have raised less than £100 million. Some have argued for more. I think that this is a fair point, but it is net necessarily a criticism. I was determined to avoid any unnecessary check to the rate of expansion. Last year, perhaps, I was cautious, compared

with some outside advice, because I knew that more could be done to stimulate the economy if it were needed. It was not needed. Look at the pace of expansion we have had in the 12 months since last year's Budget.
So, again, this time. I believe that this Budget does enough to moderate the rate of expansion, as we wish to see it, but if it is not enough, of course, more can be done. I do not think that it would be wise at this stage to go further than is necessary in the direction of checking the rate of expansion. We must have the confidence we ought to have in the ability of our economy to expand in modern conditions.
I stress again the strength of our position compared with previous occasions when our economy has been expanding. Taking the internal situation, the credit base is much sounder. There is little danger of a runaway expansion either of personal lending or of consumer credit. Retail sales are buoyant, but not booming. The Index of Production, published today, shows that production is going ahead vigorously, but not excessively; and I think that the coming figures on the level of employment will show, once again, a steadying of the level of labour demand. In my Budget speech, I referred to the fact that certain natural factors exist to steady the economy. These we should not overlook. I am sure that we should be very unwise to take premature steps to restrain of to constrain the level and pace of oar expansion if we are not absolutely certain that this is necessary.
Secondly, the external position is much stronger and healthier. Our reserves and the credit facilities available to us—the Fund, the swap arrangement with the Americans and the Basle Agreement, through all these sources—are much greater than they were. The position of the rest of the sterling area is much stronger, contributing to the strength of the reserves by the sales of their commodities and also, I am sure, contributing to the opportunities for our exports by their growing importing power as their commodity prices improve.
Thirdly—and this is also very important—I think that on this occasion


our industrial rivals are facing inflationary problems of a kind which, perhaps, they were not facing on previous occasions.
Therefore, for all these reasons—the healthier internal situation, the greater strength of our external reserve, the stronger position of the external sterling area and our better competitive position in world markets—I believe that we should have confidence in our ability to sustain expansion without inflation and that we should act—and I think that I should have acted as I did—precisely on the basis of that confidence.
Therefore, my conclusion on the general balance of the Budget is this. There is no policy for this country that is without some risk. Even to do nothing at all can be very dangerous. Every policy has some risk, but the policy which I have set out in the Budget is designed to keep expansion going with the minimum risk that can be achieved. I think that I can quote as a bit of evidence in support of that the reaction in the foreign exchange market since the Budget, which has been very encouraging. After all, those people overseas who deal in the foreign exchange market—men of experience and knowledge—tend to be fairly stringent critics of the internal economic performance of any particular country. So much for the general judgment of the scale of the Budget.
I turn to the particular measures. I think that there has been wide acceptance outside this Committee, and outside the Opposition's view, of the general argument that the increases should have been in indirect taxation. It is, after all, a form of taxation which produces quick results and, as my hon. Friend the Member for Nottingham, South (Mr. W. Clark) said, it taxes at the point of spending, not at the point of earning and, therefore, at the point of production. Indeed, within the scope of indirect taxation, I do not think that anyone has suggested that other forms of indirect taxation—such as Purchase Tax—would have been preferable to the ones I chose.
Some people have suggested that the total scope of indirect taxation should be widened. I do not believe that at present that would be wise. The time may come, I agree, but, as I can obtain

from the traditional and established sources of indirect taxation—tobacco and alcohol—the money which I need, I do not see any real argument for taxing things which at present are not subject to taxation.
Therefore, I think that both on the total scale of the Budget and on the type of taxation chosen for the £100 million which I feel we should raise, the criticisms which have been levelled against us have been, on the whole, of a remarkably mild character.
I turn to the views of the Opposition. As I said, it was about the feeblest effort that I have ever heard. There was no serious effort to oppose the Budget. Despite the brave words of the hon. Member for Cardiff, South-East (Mr. Callaghan) about a full explanation of the Opposition's alternative policies, there was a singular coyness about them.
As to the basic point of the Budget judgment, is this enough to raise in revenue, or is it too much or too little? That is the basic judgment. [Interruption.] I have made my judgment, which has been talked and written about by economists, journalists, businessmen trade union leaders—by everyone except Her Majesty's Opposition. I am grateful to the hon. Member for Cardiff, South-East, who said on television that my economic analysis could not be faulted. That was very nice of him, but he was coy about giving his view. Perhaps he remembers that last year he said that the Budget was too cautious and that there was a case for doing more to get the economy going. Suppose that I had taken the hon. Member's advice last year and done a lot more. It would have been a very different thing nowadays.
The right hon. Member for Battersea, North (Mr. Jay) made a powerful statement. He said that he could not help wondering whether I had not been too optimistic. That was his judgment of it. The hon. and learned Member for Kettering (Mr. Mitchison) said of my Budget statement
We pointed out to him that be was taking chances, but he said, 'Oh, that is all right. That is exactly what I said myself'."—[OFFICIAL REPORT, 16th April, 1964; Vol. 693, c. 705]
That, said the hon. and learned Gentleman, was the Opposition's criticism.
I do not quite know what to make of all that. Hon. Members opposite do not seem to have any idea whether they think that I am raising too much or too little revenue. The hon. Member for Orpington (Mr. Lubbock) raised this point in an intervention during the debate. Hon. Members on the benches opposite have no coherent answer to the fundamental question which the Budget must present in any year. Nor is that surprising. After all, hon. Members opposite had their marching orders from the Leader of the Opposition, who, several days before the Budget, said that any Budget proposals would be irrelevant. It was not surprising that he said that they were irrelevant when he heard them. What he meant was that he could not think of a criticism and that was the best way out of it.
To say that any change in the level of taxation is irrelevant to our balance of payments problem is to go back to the days of the 1940s. I remember Mr. Dalton saying that he was surprised, that the economy was doing well domestically, things were going up all the time, but the wretched balance of payments kept giving trouble. This strange dichotomy between the internal and external economy was, I thought, a feature which had died out of Labour Party policy. Apparently, it has come back again.
If I had reduced taxation by £300 million, would it not have affected the balance of payments? If I had put it up by £300 million, would not all the experience of recent years have shown that there would be a big effect on the balance of payments? How can the Leader of the Opposition seriously say, or expect to be taken seriously when he says, that the level of taxation to settle in the Budget has no relevance to our balance of payments position?

Mr. G. R. Mitchison: Will the Chancellor tell us at long last exactly how he arrives at his figure of £100 million?

Mr. Maudling: Had the hon. and learned Member listened to my Budget speech, which he complained was too long, he would have heard me deal with that at great length. The Opposition had no view whatever to offer about

whether I have raised the right amount of money in the Budget.
Secondly, are the means of raising the money right from the Opposition's point of view? I assume that hon. Members opposite will vote against the increases in tax on tobacco and alcohol at a later stage. They are a bit coy about this, but, once again, I do not know why. The right hon. Member for Battersea, North said emphatically that in present circumstances I should have raised not consumer taxes, but profits taxes. The hon. and learned Member for Kettering said that this was the worst possible way of raising taxation.
I assume, therefore, that the party opposite will be voting against any increase in the tax on either tobacco or alcohol. For some strange reason, they do not say. It is a strange game to play with the House of Commons or with the country to say that they are totally opposed to, the Chancellor's propositions, but not to say whether they will vote against them.
I turn to the Opposition's alternative. Both the hon. Member for Cardiff, South-East and the right hon. Member for Battersea, North said that they would give their alternatives. I am not sure what emerges, but I will try to analyse what seems to be the position. They have said that they would raise direct taxes, and we must assume that they would raise them by at least £100 million, because they have said that I am taking a risk. They have talked about my taking a risk by making it only £100 million. Therefore, I assume that they would raise at least £100 million, possibly more, by direct taxation.
Well, how? Profits Tax is a favourite candidate, but as my right hon. Friend pointed out this afternoon, Profits Tax would raise nothing in the next 12 months and virtually nothing for some months after that. On the other hand, an increase in the level of Profits Tax would very much reduce almost without doubt—without doubt—the level of company savings, and therefore, of course, would not have the economic effect of an increase in indirect taxation.
Thirdly, there is the effect on savings and on investment. Surely there can be no doubt that a deliberate increase at this stage in the level of taxation on


company profits would have a dampening effect on the determination of companies to invest in new and more modem equipment, and particularly if it were the case, as I have shown from what I have said, that the purpose would not be to effect the economy, because it could not, for a year or 18 months, but merely to exercise the ill-feelings of the party opposite towards industrial profits in general—[HON. MEMBERS: "Oh, no."] Oh, yes—as has been said by the hon. Member who talked about the yield from Profits Tax in recent years.
The fact is that the benefits from the reduced effective rate of taxation on companies' profits—certainly it came down, and a very good thing—have gone on capital allowances to those companies which really are investing on a large scale in modern equipment. The Leader of the Opposition talked about ruthless discrimination in favour of certain companies. We are discriminating not ruthlessly, but on the basis whereby the benefits of reduced company tax go predominantly to those people investing in modern, expensive, up-to-date equipment. Profits Tax would not yield anything to deal with the present situation.
Perhaps, Income Tax? That might yield a little more quickly. The P.A.Y.E. system could be changed much more quickly than Profits Tax. But how would they get £100 million from Income Tax? Would they reverse some of the changes I made last year in the allowances? Would they put up the standard rate? Because to get anything like £100 million, without reversing what was done last year for the lower rates and personal allowances, the standard rate would have to go up at least 6d., possibly something like 9d. Is this where they would do it?
The Opposition have said that they would raise money by direct taxation. It cannot be got from Profits Tax within the time. Would they get it from Income Tax? If they reject our proposals what is their alternative to put before the country? Is it to be extra direct taxation? If so, they should state the consequences; and there should be no attempt to hide them. Of course, it goes further than that. The amount of revenue they would raise

would be a great deal more than the amount of revenue needed for our programme.
My right hon. Friend quoted this afternoon, and I will refer to it again, the example which we have had time after time of promises scattered by the Opposition on every occasion, in every television interview, giving people whatever it is that is asked. "Oh, yes, we will let you have that, you can have more of this, more of that, and more of the other."
The hon. Member for Cardiff, South-East fights an honest, a noble, but a losing battle against the politics of his colleagues. I am sorry about that.

Mr. Callaghan: What about the right hon. Gentleman?

Mr. Maudling: I fight a certain number of battles, but I tend to win them when it comes to Government expenditure.
The Opposition promise the abolition of health charges, lower rates of interest for local authorities, the abolition of the earnings rule—and heaven knows how much that would cost. [Interruption.] Oh, yes, in the television programme there was no qualification at all about abolishing the earnings rule. And they promise increases in family allowances. And a minimum income scheme, which, I must say, is a little obscure, but, if it is not to be a fraud upon the people who are interested, it would inevitably cost enormous sums of money.
Then I must ask this of the hon. Member for Cardiff, South-East. He did say on one occasion a little while ago, in a debate in this Chamber, that the Opposition's programme for expanding schools, hospitals, and so on, is as much as could be accepted by a Government party with any degree of responsibility. I entirely agree with him—and with the comment on his own party, but that is by the way. On that occasion I talked about the Opposition's social insurance programme and said that it was expensive. The hon. Gentleman took me to task and said I ought to know that it was self-financing. He repeated that the superannuation scheme would be self-financing and had nothing to do with the level of Government financing.
This afternoon the hon. Gentleman went back on that. He said that the


scheme would not necessarily be self-financing, that there would be—he could not deny it—an element of Government expenditure in this great national insurance scheme of theirs. That is a very big change. If he says to me, as he did on that occasion, that if one is to tell half-truths one should make sure of one's facts, I think I can today return the compliment to the hon. Gentleman.

Mr. Callaghan: I do not think the Chancellor means that offensively, and I do not take it so. If, in the course of a heated ejaculation, I say something which is not complete, I take the next opportunity of making it clear, and I am quite ready to do so. But as the Chancellor is throwing out so many challenges to the Opposition, perhaps I may return the compliment by throwing out one to him. [Hon. MEMBERS: "The hon. Gentleman has had his day."] I will throw out one four minutes before the end. If the right hon. Gentleman is so certain about the success of his Budget, will he get the Chief Whip to move the Writs for the next three by-elections tomorrow?

Mr. Maudling: The hon. Gentleman is always very courteous to me, and I want to be the same to him. I was returning the answer that he gave to me the other day, but I got it right.
To return to my thesis, the Budget is designed to increase taxation by £100 million, which I believe to be the amount necessary to finance the great expenditure, which is growing all the time, on schools, hospitals and roads. It is, I believe, the right amount for that. The Socialist Party has made no attempt to provide any alternative judgment, so we must take it that hon. Members opposite agree with us.
First of all, on top of that expenditure, which has to be faced, there is the enormously increased expenditure which the Socialist Party is promising day in and day out. Secondly—I must emphasise this again—the alternative to taxation is savings, and anything that undermines the will or the propensity to save is bound to increase the level of taxation. There has been a dramatic increase in the level of savings under the present Government Savings

amounted to £100 million in 1951 and £1,900 million in 1963. National Savings amounted to £2 million in 1951 and £315 million in 1963.
The record of increasing saving and of increasing investment by private individual, in industry, a very fruitful form of saving, is going on all the time, and nothing could undermine that more, apart from the fact of a Labour Government, than a wealth tax and the nationalisation measures to which hon. Members opposite are deeply and irrevocably committed.
I conclude that the opposition to the Budget has been the most weak-kneed, unimaginative, pusillanimous, halfhearted, muddled and incompetent that I have ever heard.

Question put and agreed to.

Resolution to be reported.

Report to be received Tomorrow; Committee to sit again Tomorrow.

BUSINESS OF THE HOUSE

Ordered,
That the Proceedings on the Motions relating to Finance Bill (Procedure) and to Statutory Instruments may be entered upon and proceeded with at this day's Sitting at any hour during a period of Two hours after Ten o'clock, though opposed.—[Mr. Redmayne.]

FINANCE [MONEY]

[Queen's Recommendation signified]

Considered in Committee under Standing Order No. 88 (Money Committees).

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

Resolved,
That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise the payment out of the Consolidated Fund to trustee savings banks of sums for the performance by trustee savings banks of functions conferred on them under the National Debt Act 1958.—[Mr. Green]

Resolution to be reported.

Report to be received Tomorrow.

FINANCE BILL (PROCEDURE)

Resolved,
That, notwithstanding anything to the contrary in the practice of the House relating

to the matters which may be included in Finance Bills, provision may be made in any Finance Bill of the present Session for amending the provisions of the Sugar Act 1956 as to distribution payments and distribution repayments.—[Mr. Maudling.]

WEIGHTS AND MEASURES REGULATIONS

10.3 p.m.

Mr. Graham Page: I beg to move,
That this House approves the resolution of the Select Committee on Statutory Instruments regarding the Weights and Measures (Equivalents for Dealing with Drugs) Regulations 1964, contained in their Second Report, regrets that the Minister of Health and the Secretary of State for Scotland have together made unexpected use of the powers conferred on them by statute, and calls On them to withdraw the present Regulations and to substitute others.
The Resolution to which the Motion refers appears in the Second Report of the Select Committee on Statutory Instruments in which, in that Resolution, it is reported:
That it is the opinion of this Committee that the special attention of the House should be drawn to the… Regulations…on the grounds that it appears to make unexpected use of the powers conferred by the Statute under which it is made.
The Weights and Measures (Equivalents for Dealing with Drugs) Regulations 1964, were made by the Minister of Health and the Secretary of State for Scotland under Section 10(7) of the Weights and Measures Act, 1963, and the power under that Section is exercisable by Statutory Instrument subject to annulment by a Resolution of either House of Parliament.
As the House knows, a Prayer to annul a Statutory Instrument has to be debated in this House within 40 days of the Instrument being laid before the House. That is under Section 5 of the Statutory Instruments Act, 1946. At the same time, there is Standing Order No. 100 under which no debate on a Prayer should either start or continue after 11.30 p.m. It will be readily seen that, by the combined operation of what I will call the statutory 40-day rule and the procedural 11.30 rule, time may not be found to debate a Prayer before the period of 40 days has expired. That happened in the case of a Prayer against this Statutory Instrument under the Weights and Measures Act.
This sort of situation was foreseen when Standing Order No. 100 was made. When it was being proposed as a Sessional Order, in 1954, the then Leader of the House, Mr. Harry Crookshank,

as he was then, referred to this very important point. I will not quote from column 2170 of HANSARD for 31st March, 1954, but he drew attention to this very difficulty—that a Prayer against a Statutory Instrument might be squeezed out by the combination of these two rules. But he also referred to the wording of the Standing Order, which said:
Except in such case as the House may otherwise order.
When that sort of situation arises, the House may order, and could have been invited to do so in this case, the suspension of the Standing Order so that the Prayer may be debated before the 40 days have expired. That course was not taken and the only way in which the House can now debate the subject is on a Motion of this sort.
It is my duty to endeavour to satisfy the House that the Prayer was, and the Motion is, one for which time ought properly to be found, that there is justification for the debate. As the House knows, all Statutory Instruments are considered by the Select Committee on Statutory Instruments. They are considered not on their merits, but the Committee is charged with the duty of considering whether a Statutory Instrument is, for example, a charge on public funds, or a preclusion of challenge by the courts or has retrospective effect and whether those things are authorised by the Statute under which the Minister purports to make his Order. In particular, the Committee is charged with seeing whether a Statutory Instrument appears to make some unusual or unexpected use of the statutory power vested in the Minister to legislate.
If a Minister has transgressed, the Select Committee draws the attention of the House to the fact. The Select Committee does not lightly report Statutory Instruments to the House. With the help of your counsel, Mr. Speaker, if it is dissatisfied with a Statutory Instrument the Select Committee calls for an explanation from the Department concerned, and may even call for witnesses from that Department. Only after it had thoroughly considered the Statutory Instrument and is still dissatisfied would it report to the House.
After that, the Committee can do no more, and it is up to an individual hon.


Member to pray against the Statutory Instrument. It has become traditional that a Prayer by an individual Member, based on a Report from the Select Committee on Statutory Instruments, has been found time for debate in the House. That, surely, is right, because it is of considerable constitutional importance when the Select Committee reports an Instrument to the House. For convenience, Parliament delegates legislative powers to Ministers, but it has appointed the Select Committee as a watchdog over those powers to see that they are not abused; and it is no use having a watchdog if it is ignored when it barks.
Recently, time was found in this way for a Prayer against a Statutory Instrument which had been reported. That was the Building Standards (Scotland) Regulations. That Instrument was reported on 4th February this year as being an unexpected use of the powers delegated to a Minister, and it was debated in the House on 10th February. I refer to those Regulations only because they provide a precedent which, I think, should guide the House on the Regulations mentioned in this Motion. Those Regulations required persons to obey certain British standards and codes of practice. They defined those standards and codes of practice as being those which were already published and also those which were to be published from time to time and any amendments of the existing Regulations.
The effect of that was that the British Standards Institution could rewrite part of the Statutory Instrument which the Minister had made, without laying an Instrument before the House, and merely by publishing it in some document issued by that body. Clearly, that was a delegation of the Minister's powers of legislation, which is one thing Parliament does not allow a Minister to do. I am glad that on that occasion my right hon. Friend the Secretary of State for Scotland recognised the error and undertook to bring in an amending regulation.
However, at that moment he was joining my right hon. Friend the Minister of Health to make exactly the same constitutional error in this Statutory Instrument, The Weights and Measures (Equi-

valents For Dealings With Drugs) Regulations, 1964. The purpose of these Regulations is twofold. The first is to prescribe for drugs how many milligrams there are to the grain. Hon. Members will find that in Regulation 2. I understand that this has become desirable, and perhaps even necessary, by reason of the fact that the 63rd edition of the basic reference books, the British Pharmacopoeia and the British Pharmaceutical Codex, have for the first time set out the standards for drugs in the metric system instead of expressing them in imperial units, as they had been previously expressed.
The second purpose of the Regulations is to require manufacturers or wholesalers as from 1st August, 1965, and retail dealers as from 1st February, 1966, who sell certain drugs in cachets, capsules, injections, lozenges, suppositories or tablets pursuant to an order expressed in grains to carry out that order in the equivalent metric unit. So far, so good.
But to what drugs will the Regulations apply? The drugs in respect of which the dealer is bound by these Regulations to dispense in metric units are those for which a monograph exists in the 63rd edition of the British Pharmacopoeia or the British Pharmaceutical Codex,
or in any amendment or new edition thereof
which means that if new editions appear in future they will bind anybody who has to deal with drugs to these methods. It is the words
or in any amendment or new edition thereof
which are constitutionally objectionable.
I do not wish to detract from the immense value of these books—the British Pharmacopoeia and the British Pharmaceutical Codex—to the medical profession. In these books are set out the monographs for several hundred drugs. Each monograph is really a short chapter, headed with the name of the drug, followed by the chemical formula and a statement of the standards, properties and ingredients of the drug, and so on. If a doctor prescribes a drug which is mentioned in these books, the chemist must make up that prescription in accordance with the standards set out in the monograph. If a retail chemist


orders from a wholesaler drug X, which is in the British Pharmacopoeia, the wholesaler must supply it in accordance with the quality and ingredients set out for that drug in the Pharmacopoeia.
The Regulations provide that if, for example, a doctor prescribes that the drug shall be made into pills of so many grains, the chemist has to make up the prescription, translating it into milligrammes, in accordance with the Regulations and by reference to the Schedule to those Regulations. There can be no objection in the case of drugs which already have a monograph; in their case it is legislation by reference to a specific document which is already in existence. But in the case of drugs which may in future be introduced into the Pharmacopoeia or Codex by an amendment or some further edition of either of those books, the Minister of Health and the Secretary of State for Scotland are delegating their powers of legislation either to the General Medical Council or the British Pharmaceutical Society, which issue these books.
They are very fine bodies, but they are not bodies to which Parliament has delegated power to legislate. I understand that editions of these books are published every five years, and that in the intervening period many amendments are issued, from time to time. It may be said that it will be inconvenient for the Ministers to have to make new regulations every time a new drug is discovered or is put on the market. It may be inconvenient, but that is the law as it stands, and the inconvenience of the existing law is no excuse for breaking it. The General Medical Council and the British Pharmaceutical Society may be very eminent bodies, and proper bodies to decide what drugs should be put on the market and how they should be prescribed, but Parliament has not given them power to legislate and the Minister cannot do so in place of Parliament.
My right hon. Friend may say that Regulations of this sort have been made previously. Perhaps it may be considered that a precedent is to be found in the Regulations made in 1962, when the drugs to which those Regulations applied were those which were included in the British National Formulary for the time being in force. I think that that would be a bad precedent, and that

those Regulations were just as invalid as are the Regulations that we are discussing tonight—and two wrongs do not make a right.
I also hope that my right hon. Friend will not quote as a precedent the Regulations referring to medical practitioners and medical premises on the register from time to time. Those Regulations are in no way analogous to the present ones. In that case the subject brings himself within the Regulations by registering his premises. That is quite different from an entirely outside body deciding what shall be an offence. I submit that that is the right way to put the position, looking at it from the angle of the criminal law. The Regulations create criminal offences. We are not just discussing a constitutional exercise tonight. It has some greater importance than the merely academic.
Under Section 52(2) of the Weights and Measures Act, 1963, the penalty for breach of these Regulations is £100 fine and for a second offence £250 fine or imprisonment not exceeding three months, or both fine and imprisonment. Under the Regulations it will be an offence to supply any drug which is already named in these two books otherwise than by reference to milligrams, but it will also be an offence to supply any drug which may be named in future in these books without any authority of a Statutory Instrument coming before the House other than by milligrams.
This is the creation of a new offence without it coming before the House and without the intervention of any responsible Minister. The British Pharmaceutical Codex is not even available in the Library of this House for hon. Members to see. The British Pharmacopoeia is available, but I have not been able to find the Codex. What happens if the British Pharmacopoeia does not agree with the British Pharmaceutical Codex? One is produced by the General Medical Council and the other by the British Pharmaceutical Society.
There are, of course, many cases in which the House would like to legislate in advance for new knowledge which may be found in medical practice and relying on experienced experts on the subject without necessarily bringing it back to the House to vet every time. There may be such cases. With rapid


scientific progress these occasions are perhaps likely to occur more and more frequently. It should not be difficult to devise a procedure whereby in such cases the particular body concerned, such as the General Medical Council or the British Standards Institute, would in some way certify to the Minister that there had been proper consultations and publications and the Minister could so certify to the House, but that is not our procedure at the moment.
Until some such convenient procedure as that is part of our law a Regulation such as is before the House tonight in this Motion cannot stand, and I ask the House to require its withdrawal.

10.24 p.m.

Mr. Eric Fletcher: I support this Motion.
The case for the Motion has been so admirably stated by the hon. Member for Crosby (Mr. Graham Page) that all I need to do is to add a few words in support. There are two separate questions involved in the Motion: first the merits of the matter, and, secondly, the procedure. As the hon. Member observed, this is not a Prayer in the ordinary sense. It is a specific Motion of a rather novel and, I think, unprecedented kind. I therefore first say a word about the procedure which has necessitated this Motion instead of a Prayer appearing on the Order Paper for tonight.
The House has always been very jealous of the exercise by Ministers of the Crown of their powers of delegated legislation. For that reason, the Select Committee on Statutory Instruments was set up to examine and scrutinise every Statutory Instrument and make a report to the House as to whether they appear to be satisfactory, or whether there is any special reason which require the Select Committee to bring them to the notice of the House.
This Statutory Instrument—the Weights and Measures (Equivalents for Dealings with Drugs) Regulations 1964—was considered by the Select Committee. The Select Committee took the view that it made an unexpected, which means an unauthorised, use of the power conferred by the Statute and that therefore it was the duty of the Select Com-

mittee to report the matter to the House so that the House might take the appropriate course.
Most unfortunately, the House did not have an opportunity of considering within the allotted 40 days the Prayer which the hon. Member for Crosby and other hon. Members tabled following the Report of the Select Committee. I should explain that under the Statutory Instruments Act, 1946, there are 40 sitting days, which includes weekends when the House is normally sitting, within which any Member may pray against a Statutory Instrument. Some Prayers arise because Members are dissatisfied with the merits of a Statutory Instrument. Other Prayers arise because the Select Committee has drawn attention to some improprietry or irregularity in the Statutory Instrument.
When that course occurs, there is a natural abbreviation of the 40 days which are available, for this reason. The Select Committee meets once a fortnight. If it feels that any Statutory Instrument requires consideration, it is obliged under its terms of reference, before reporting it to the House, either to call for a memorandum from the Minister or his Department, or in some cases to ask for representatives to attend to explain certain matters. It is only after that step has been taken that the Select Committee then makes a report.
The Select Committee did that in this case. As a result of its Report, thinking that it was a matter which required the attention and consideration of the House, a Prayer was tabled by the hon. Member for Crosby and others shortly after the Select Committee's Report. It would have come on 4th March, but on that day Government business ran on to half-past eleven. Therefore, under Standing Order No. 100 the Prayer could not be taken. It was tabled again for 5th March, when, I believe, a similar situation arose.
The Prayer could then have been adjourned until the Friday, but you, Mr. Speaker, will realise that, although Standing Orders permit Prayers to be taken on a Friday, a convention has grown up that Prayers are never tabled on a Friday, and I think that it would be very inconvenient if that custom were to arise.
Therefore, the hon. Member for Crosby postponed the Prayer until the last of the 40 available days, which was 9th March. On that occasion again Government business ran on until after half-past eleven, and, therefore, the Prayer was squeezed out. The 40 days had expired. The House was deprived of any opportunity of considering either the Report of the Select Committee or the Prayer.
It is for that reason that this rather unusual Motion appears on the Order Paper tonight. Therefore, I think the first thing that requires the attention of the Leader of the House is what change should be made in Standing Order No. 100 to prevent this regrettable situation arising again. The hon. Member for Crosby pointed out that when the then Leader of the House, Mr. Crookshank, proposed what is now Standing Order 100—then a Sessional Order but now a Standing Order—he drew attention to the opening words of the Standing Order, which read:
Except in such cases as the House may otherwise order:—…
Then there are the relevant passages which enact that no Prayer can be taken after 11.30 p.m. It was contemplated at that time that some steps would always be taken to ensure that Standing Order 100 did not deprive the House of the right of considering a Prayer within the allotted 40 days.
The hon. Member for Crosby stated that no Motion was put down to waive the Standing Order. I am not sure whether it is open to a back bencher on either side of the House to put down such a Motion. In the ordinary way any Motion to suspend the Standing Order is put down either by the Leader of the House or a Member of the Government and, therefore, I am not sure whether it is open to any other hon. Member to propose that the Standing Order should be suspended. Nevertheless, it is obviously desirable, when a situation of this kind arises, that there should he some machinery available to the Horse to enable it to consider a Statutory Instrument reported to the House by its Select Committee.
There would appear to be two possible ways in which this situation can be remedied. It would, of course, be possible to amend the Statutory Instruments

Act, 1946 by extending the term of 40 days, but that would involve legislation and there might be objections to that. The simpler course, and the one I urge on the Leader of the House, would be to consider what amendments to Standing Order No. 100 are required in the light of this experience to prevent this situation arising again. After all, it would not be difficult to amend Standing Order No. 100 to make an exception for, perhaps, the last five or six days of the 40 days praying time so that if a Prayer is on the Order Paper within the last five on six days of praying time the 11.30 rule does not apply.
It seems that some such variation of the existing Standing Order is required if the House is not to stultify itself by being deprived, as it was on this occasion, of any opportunity of considering a Prayer which a number of hon. Members on both sides wished to put down in respect of this Statutory Instrument. This is the matter the Leader of the House should consider on the general principle involved.
In regard to the merits of this Statutory Instrument, it is fortunate that although this is not an ordinary Prayer, it would still be possible—if, as I hope, the House agrees with the submission made by the hon. Member for Crosby—to correct what seems to some hon. Members to have been on this occasion a clear abuse by the Minister of powers conferred on him by Parliament. I need not elaborate the matter. There used to be a number of cases in which Ministers exceeded powers of delegated legislation and it was because of the outcry that was at that time produced that the Select Committee was set up. I think that in recent years there have been relatively few cases in which the Select Committee has had to report excessive zeal on the part of Ministers in abrogating to themselves powers they did not have.
This is a clear case in which there has been abuse and, in the interests of the preservation of Parliamentary control over the Executive, I should have thought that, for the reasons given by the hon. Member for Crosby, this is a case in which the Minister would wish to withdraw this Statutory Instrument and defer to the wishes of the House. Even if there were doubt about the


matter, surely the Government should not wish to rely on the fact that the 40 days' time for praying against the Instrument had expired.
All I need add on the merits is that the Minister has been given certain powers, but he has not been given the power to sub-delegate his legislative function. It is contrary to all our traditions to attempt to confer upon a private body, however eminent, however respectable, the power to legislate and the power to impose additions to our criminal law—and that is what is being done. In Regulation 3 the Minister says that in so far as the British Pharmacopoeia and the British Pharmaceutical Codex revise current editions by adding various other drugs, with monographs attached to them, then individual members of the public become liable to penalties.
I have no doubt that these are very reputable bodies which will act with the greatest circumspection and discretion, but they are not allowed to legislate or create a crime. That is the duty of Parliament. They are responsible to nobody, however properly they may wish to act. It may be inconvenient to change Statutory Instruments from time to time, but it is not all that inconvenient. Those who sit on the Statutory Instruments Committee know that a number of Statutory Instruments are changed with great frequency, for what may appear to members of the public to be very trivial reasons. They are changed because the law has to be changed in that way and that is the only way, Parliament has laid down, in which the law can be changed other than by Act of Parliament. If Parliament is to function properly, and delegated legislation is to be kept within properly prescribed bounds, then it is right that the House should take a particularly strict view in these matters.
For these reasons, I hope that the Minister will accept the proposals made to him and will withdraw the Statutory Instrument.

10.38 p.m.

Sir Godfrey Nicholson: Curiously enough, I think that this is rather an historic occasion. It will not attract much public significance, but

what we do or fail to do tonight may have far-reaching consequences in the ultimate, both on the rights of the individual and on the rights of the House.
My hon. Friend the Member for Crosby (Mr. Graham Page) and the hon. Member for Islington, East (Mr. Fletcher) have put the position quite clearly. I am reminded of the story of the little Dutch child who found a leak in a dyke, and who saved the situation first by putting in his hand, then his arm and then his whole body, until rescue came and the leak was stopped. In this case the leak in the dyke is only a slight trickle. But I believe that this confession of the power of sub-delegation by the Government may ultimately grow until it represents considerable inroads into those rights of the individual which we are here to protect.
I am also concerned with the rights of the House. I have been interested in Statutory Instruments for a long time. I have been Chairman of the Select Committee. I sat on the Select Committee appointed to consider how Prayers should be dealt with. I was left with the impression that the situation was watertight and that if the watchdog Committee set up by the House reported adversely on a Statutory Instrument or the powers claimed thereunder, then the House would have the opportunity to debate a Prayer for the withdrawal of that Statutory Instrument.
I was amazed a few weeks ago, as a result of Questions in the House at the time of the announcement of business, to learn that the system had completely broken down. What seems to me to be serious is that we had to rely upon the good will of the Leader of the House for tonight's exercise. It would be churlish of me not to thank my right hon. and learned Friend for the generous and broadminded way in which he accepted the suggestions that were made to him, but it is simply not good enough that we should be at his mercy, or that of any other Member of the House, for the rights of this House. Surely, it must stand to reason that when a Select Committee, appointed by this House—and it should be remembered that a Select Committee is this House in miniature—reports adversely upon any action of the Government and hon. Members desire to


debate that Report, it is unthinkable that we should not have that opportunity.
Unless the House puts its foot down on both these issues, particularly on the rights of this House, a leak in the dyke may start which will take much effort to staunch. There is, I feel, only one way in which this incredible situation can be dealt with, and that is to refer it at once to the Select Committee on Procedure, which has already been appointed.
I ask my right hon. and learned Friend the Leader of the House to recognise that this is not just a case in which he can get up and say, "Peccavi, I am very sorry, this will not happen again." He must take steps to see that the House reaches a sensible conclusion designed to avoid the arising of this situation again. As I said when I started, nobody will take any notice of this debate. If, however, we let this occasion pass without expressing our views strongly, we shall do great harm in the ultimate future.

10.42 p.m.

Dr. Horace King: First, I congratulate the hon. Member for Farnham (Sir G. Nicholson) upon his speech tonight and the support he has given to the Committee over the past weeks in its efforts to have this matter discussed. We always regard the hon. Member as one who has for many years zealously fought for the rights of this House and of Parliament.
In congratulating, also, the hon. Member for Crosby (Mr. Graham Page) upon his tenacity in these past weeks and for his speech tonight, I would say, first, to the House that the Prayer to which he was referring against an Order was an unusual kind of Prayer. It was not a Prayer of the ordinary kind in which somebody in the House was worried about the nature of or the policy contained in a regulation, but was a Prayer that he put down on behalf of the Committee because he thought that the Order infringed a constitutional principle.
I echo what the hon. Member for Farnham has said and I thank the Leader of the House for his courtesy in sending to every hon. Member who had his name to the Motion on the Order Paper a letter informing them that this debate would take place to-

night. Throughout our discussions on Thursdays, the Leader of the House has shown clearly that he accepts our view that this is an important matter and that it is his duty, as Leader of the House, to protect the rights of hon. Members and of Committees and of Parliament. He has carried out his duties in this respect as those of us who have come to know him over the years would expect him to do.
I do not wish to go into detail on the point at issue between the Statutory Instruments Committee and the two Ministers concerned. I merely repeat from the case so admirably put by the hon. Member for Crosby and my hon. Friend the Member for Islington, East (Mr. Fletcher), the Chairman of the Statutory Instruments Committee, that we made exactly the same constitutional criticisms on the Building Standards (Scotland) Regulations, 1963, that when they were debated in the House, after we had had replies from the Scottish Minister, the Minister concerned took back the Regulations and undertook to amend them. The difference between that case and this one is that the Scottish Minister concerned and the Minister of Health have dug their heels in on this one and refused to budge, despite the Report which the Select Committee has made to the House.
I believe that the hon. Member for Farnham is right: the issue we are debating tonight is whether we are prepared to hand over to anyone outside Parliament power to make laws which have never been approved by Parliament. I want to remind the House of one or two basic principles. The Statutory Instruments Committee was founded because under the present pressure of business Parliament cannot make laws in the detail which is necessary. What Parliament can do is to make laws, and, in certain parts of those laws, empower a Minister to write out specific details in Statutory Instruments or Orders or Regulations. Ever since Hewart's excellent book, "The New Despotism,"—indeed, if not before then—Parliament has been anxious about the power which it gives to the Executive, anxious that that power should no be badly used in any way.
It is impossible for the House to debate most of the Orders—there are


thousands of them; and it is certainly impossible for the House to amend them. Indeed, that is why Ministers were empowered to make them, and yet, in a Regulation, a Minister may be tempted to do something which he wishes to do, but which Parliament has not said that he can do.
That is what the Select Committee means when it reports of the Regulation of which it disapproves that this is an unexpected use of powers, and this unexpected use of powers, of doing what the Minister is not empowered under the parent Act to do, is the most dangerous of all abuses which might be made in Regulations.
In addition to the illustrations given by the hon. Gentleman the Member for Crosby, let me illustrate. A Minister may be instructed in the parent Act that before he makes an Order he must consult certain bodies, that he must take a number of steps, that he should consult another Minister. One of the functions of the Select Committee is to see not only that these preliminary steps have been taken, but that the Order itself recites that they have been taken. It is a temptation, when making a Regulation, to make it retrospective, which is against the nature of Parliament. There are other defects. For all these reasons we set up at the beginning of each Session the Statutory Instruments Committee.
I believe that this Committee is a good Committee. I am not speaking as a member of the Committee. I want to pay tribute to my hon. Friend the Chairman of the Committee. Hon. Members on both sides of the House know that he presides over the Committee with distinction. As a non-lawyer, as non-learned, I want to pay a sincere tribute to the learned members of the Committee. We had an example tonight in the speech of the hon. Gentleman the Member for Crosby. For eight to 10 years I have watched with admiration the work of my legal colleagues on this Committee in their examination of various Orders. All of us would wish to pay tribute to the excellent advice we get at each of our meetings from our counsel, Sir Robert Speed.
It is obvious that the Committee, no matter how closely it watches Orders,

will never find a Minister engaged in a really felonious gerrymandering of the law. Ministries and Ministers are, like ourselves, law-abiding citizens. When making Regulations they do no more and no less than they are empowered to do by a parent Act, in 999 cases out of 1,000, and even in the thousandth case, which is this one we are discussing tonight, one would not accuse the Minister or his advisers of making a willful, criminal error. In this case, for example, the Department still thinks that it is right and that the Select Committee is wrong. It is because of that clash that we have had the original Prayer and tonight's Motion of censure on the Ministry.
The work of the Statutory Instruments Committee is to preserve the British people against tyranny. In some countries tyranny comes overnight. I have often said in another context that if ever tyranny came to this country it would come in the most respectable guise and probably be led by the Archbishop of Canterbury and all the Establishment in the smoothest and gentlest way, or it would creep in by degrees. This is where the hon. Member for Farnham is so right. I admit that the actual point we criticise in the Order is a tiny one. But although this may be a tiny breach in the dyke, that tiny breach could very easily enlarge if the House does not take notice of it tonight.
It is very important that the House should support its Committee tonight and make the Minister take back the Regulations, or, if it does not, deliberately as a House give the Minister the power to do what we believe he had not the power to do when we examined the Regulations in Committee. This is not a question of whether one amount of pharmaceutical product in two years' time is better than one that is specified at the present moment. It is not a question whether the methods that are used to measure weights and measures will improve in the years ahead. Those of us who sat on the Weights and Measures Bill Committee know that there is a tremendous revolution going on in our conception of weights and measures. We know that there is a great deal of new thinking going on.
But that is not the issue. If the Regulations pass in their present form, we are handing over by a tiny amount—a dram or a scruple, if I may use the weights and measures of the pharmacists—to pharmacists, editors, printers or publishers, for the best of reasons perhaps at the moment a power which the Minister thinks they ought to have. But the time may come when exactly that same power will be handed over to pharmacists, publishers or anybody else not by a dram or a scruple but by something which is really considerably weighty, affecting the well-being and liberties of our people.
It is worth pointing out for the record that the Statutory Instruments Committee, which examines thousands of Instruments every year, very rarely has to report one, but I think that when it does report one it has the right to expect the support of its colleagues in the House of Commons.
In any case, I think that the debate will do good. I think that we shall now have to face the issue, which is that when the Statutory Instruments Committee reports that it believes that a Ministry has exceeded its constitutional powers and when it has taken the action that it did in this case of praying against Regulations, not on policy grounds but on constitutional grounds, it would be wrong for the House not to ensure that it is debated. Just as a Motion of censure on the Government has to be debated, and just as, in the last resort, this Motion of censure on the Ministers concerned has to be debated it seems to me that the Reports of the Statutory Instruments Committee, when they raise a constitutional issue, ought to be faced in the House.

10.54 p.m.

Mr. Ronald Bell: The procedural considerations which are involved in the Motion have, I think, been very adequately discussed by hon. Members on both sides. I am inclined to think that perhaps no dramatic change is needed either in the Standing Order or in the Statute which prescribes the 40 day period, because I have a feeling that what went wrong in this case was that my right hon. and learned Friend the Leader of the House probably actually did not know until too late what was happening. Indeed, I

think he said so one Thursday, when the business of the House was discussed.
As I understand the Standing Order, there is no inherent problem in suspending the operation of it by a Motion so as to make sure that a Prayer of this character is discussed when time is getting short. I think what happened on this occasion was that the Leader of the House did not realise what had happened until the last day, when he was up against the interesting position that, if the Standing Order was suspended so as to allow for the Prayer being taken after 12 midnight, it would be debated on the forty-first day after it was laid and not on the fortieth, so that it was too late for remedial action to be taken.
However that may be, it is of first importance that, when a Prayer is put down for debate in the circumstances in which that Prayer was put down for debate, it should be discussed by the House and not lost through the operation of Standing Order No. 100. I do not think that any hon. Member will doubt the importance of that. My hon. Friend the Member for Crosby (Mr. Graham Page) has done a great service in his persistence in getting the matter debated, because I feel sure that it will give the Leader of the House an opportunity of reaffirming the assurance given by Lord Crook-shank, when he was Leader of the House, and putting on record again, in more modern times, that a Prayer founded upon a Report of a Select Committee will never be allowed to die in such circumstances as this last one did.
I am not sure that we are wise to confine what we say tonight to the Prayer founded upon the Report of the Select Committee on Statutory Instruments. Prayers are the only control which the House as a whole has over the power of making delegated legislation. It should be a convention of the House that any Prayer put down in reasonable time should go on for debate.
Obviously, if a private Member puts down a Prayer on the thirty-ninth day after an Order has been laid, he cannot expect total disruption of the proceedings of the House so that his Prayer shall be debated on the last night available, but in the case of the Select Committee on Statutory Instruments there is a risk inherent in its procedure in that Prayers founded upon its reports inevitably are put down rather late and, therefore, in


assessing what is a reasonable time to put down a Prayer, the Leader of the House must, of course, take into account the fact that it is a Prayer based upon a report to the House by the Committee.
I feel confident that the result of my hon. Friend's bringing this before the House tonight will be that, for at least 10 years to come, a similar incident will not occur again. The price of liberty is eternal vigilance and I do not doubt that our successors in this House will be equally vigilant and that, in 10 years' time, there will be another row if necessary.
The merits of the Motion are quite equally important. The Statutory Instruments Committee is, by the Resolution that sets it up, debarred from considering anything so interesting as the merits of the Instruments. The substance of the point we bring up tonight is inevitably tedious superficially. The reason that such matters are referred to the Select Committee is that they are too tedious to command the attention of the House as a whole and this disagreeable task is put upon a small number of hon. Members, who discharge it cheerfully and, no doubt, efficiently. But while the point itself may be very small in its compass, it involves a constitutional principle.
I am glad that my hon. Friend the Member for Crosby referred to the Building Standards Regulations, the subject matter of a recent Prayer. The case of the Building Standards (Scotland) Regulations show exactly the danger of allowing this sort of thing to pass. They were a much more flagrant example. They said, in effect, that the standards for building operations in Scotland should be as fixed from time to time by the British Standards Institution. That was a bit much for anyone to swallow, and the Select Committee did not swallow it.
When the Prayer was debated, the Secretary of State for Scotland did not attempt to defend the position. He at once said that this was something which could not be allowed and that he would introduce an amending Instrument before the main one came into force, which he did. If the Select Committee and the House were not prompt in drawing attention to any kind of delegated

legislation, that sort of thing would become common practice. This is the easy and lazy way of doing things, and it is most attractive to Departments.
These Regulations are not such a flagrant example. They are rather closer to the thin end of the wedge and the Departments concerned have contrasted what they have done with what was being done with the Building Standards Regulations. In their memorandum to the Select Committee they say that what they are doing is quite different, that the actual effect of the law and its very nature were being changed by the Building Standards Regulations by each subsequent addition to the booklet of the British Standards Institution, while in this case they were laying down what the law should be and that only its range of application would be changed by subsequent editions of the Codex and British Pharmacopoiea.
Is there any difference in principle between saying what the Building Standards Regulations said and what these regulations say? These say that this prescription shall apply, that this rule of law shall apply, but that to what, it shall apply shall be decided by the Codex Committee of the Pharmaceutical Society and the Pharmacopoiea Committee of the General Medical Council. Whether it shall apply to this or that drug and for what period shall be decided not by Parliament, or the Minister acting on the delegated authority of Parliament, but by the appropriate committees of those two bodies.
The British Pharmaceutical Society is a private society. It produces a book called the British Pharmaceutical Codex, which is in the House of Commons Library, where I was reading it this evening, for the general guidance of pharmacists. It is a very useful book, but the Society could produce it when it liked and could make what amendments in it it liked and need not print it unless it wanted to, or could print an edition as limited as it chose. The amendments to it between each five-yearly edition could be printed and published in any form that appealed to the Society and made available to anyone to whom it chose to make them available and denied to anyone to whom the Society chose to deny them.
The General Medical Council, which produces the British Pharmacopoeia, is at least a statutory body and one of its statutory functions is the production of the British Pharmacopoeia. But the Act of 1956 which confers that power upon it does not confer any statutory binding force on the British Pharmacopoeia, which is merely a convenient set of standards of purity, descriptions of drugs. No doubt it is a very useful document, but no one ever intended it to form part of the law of the land. It is simply drawn up and changed from time to time by a committee appointed by the General Medical Council. No kind of statutory procedure is observed.
I have examined the 63rd edition of the Codex. Editions are published every five years, and I find that, during the five years 1958 to 1963, 263 monographs have been added, and 103 deleted. The rate of change has been growing, so from 1963 to 1968 we can expect about 500 alterations in the British Pharmacopoeia and equally, I imagine, in the Codex. That is several every month, and indeed several every week, and as they go in and come out so does the application of the law in this Statutory Instrument.
It is said that this is different from the Building Standards (Scotland) Regulations. I confess that on the principle of delegation I cannot detect the difference. While I agree that it is less flagrant than the Building Standards Regulations, it involves the same principle, and if we once accept the doctrine that these Statutory Instruments can be made by reference to unofficial private publications, and the different editions of them, I think that the control of this House over delegated legislation will have gone.
For those reasons, bearing in mind that this is not a permissive Statutory Instrument but a mandatory one, with penalties, imprisonment, and so on, I ask the House to take a serious view of this and not to be misled by the specious argument that what we are doing is laying down the law and that the area of application—and only the area of application—will be varied by outside bodies.
The principle is the same. That principle is at stake tonight, and it has to be decided tonight. I hope, therefore, that my right hon. Friend the Minister of Health will not stick on any depart-

mental pride and say that, like the housemaid's baby, it is only a little one. I know that it may mean somewhat frequent changes of the Regulations, but that is not the argument.
Those who serve on the Select Committee on Statutory Instruments see the constant ebb and flow of road traffic regulations for one-way streets and all kinds of traffic regulations; regulations which are made one day and cancelled the next, and it is right that they should be. I remember the occasion when the tram lines on the Embankment were ripped up. Those concerned with the project put up "No entry" notices at each end of the Embankment and at the various access points to keep out motor traffic. That was no doubt a sensible thing to do, but the late Sir Herbert Williams ferreted out the fact that the Ministry had not obtained a Statutory Instrument to give it authority to do that and that the notices were all bluff.
It is important that we should keep our procedure right. Everything that is done should have the sanction of law, and if that means laying Statutory Instruments rather frequently and then cancelling them after a few weeks, it is, nevertheless, an inherent part of the rule of law. That is what this House is here to preserve, and I therefore hope that my right hon. Friend's reply will be such that my hon. Friend will be able to withdraw the Motion.

11.4 p.m.

Mr. James Hoy: I think that the House is indebted to all the Select Committees which meet upstairs for the work that they do. Whether it is the Public Accounts Committee, whose Chairman has spoken tonight, or the Select Committee on Statutory Instruments, what they are doing is seeking to protect the rights of the House against the Executive.
I was delighted to hear the hon. Member for Crosby (Mr. Graham Page) move the Motion. I thought that he did a first-class job for the House of Commons. It is in that light that we should consider the Motion.
I am sorry that the Minister who is to reply is the Minister of Health. The Scottish Office is also involved in the argument. Of the two Ministries the one most culpable is surely the Scottish Office,


because it is apparently quite prepared to do anything that the English Ministry does, and without giving the matter any consideration it has said that if the English Ministry is to do this, then it must be right. What is frightening about the situation is the evidence laid before the Select Committee on Statutory Instruments. At Question 25 the Chairman—my hon. Friend the Member for Islington, East (Mr. Fletcher)—asked the Scottish Office witness:
Do I understand from that that you did not give any independent consideration to the obligation to lay the Instrument?
The witness replied:
So far as the Scottish lawyers were concerned we were not asked for an opinion about this until approximately the same time as Mr. Davis"—
the representative from the Ministry of Health—
was asked. We in the Solicitor's Office had heard about this.
He ought not to have heard. Apparently somebody told him. He said:
I had been told about it and I was quite clear that the Regulations should be laid. In Scotland, we have not got any doctrine of escrow.
In effect, he was saying that somebody told him about it and he accepted it without any consideration or consultation at all.

Mr. Ronald Bell: The hon. Member is on bulls and boars at the moment. We are on weights and measures.

Mr. Hoy: With respect to the hon. Member, it is exactly the same point. The Scottish Ministry was arguing that it was prepared to accept what the English Ministry said. I am not arguing any more than that for the moment.
My hon. Friend the Chairman of the Select Committee then said:
Just to get it clear, you do not take the view in Scotland, do you, that any failure on the part of an English Ministry to comply with the Act exonerates the Scottish Office?
to which the reply was:
Oh, indeed not, not in law.
It does not exonerate it in any way. This is a little frightening. It is important, because if a Ministry brings a Statutory Instrument before the House the House is entitled to expect that the Ministry has paid some attention to what is contained in that Instrument.
We are not arguing any more than that tonight. Question 33 was put by the hon. Member for Crosby himself. He asked:
At what date did the Scottish Office decide that new Regulations must be made and that these old ones were, indeed, ineffective?
The Scottish Office representative replied:
I can only answer to that, at the same point of time as the Ministry decided this. We were following the Ministry in this. This may sound a not very satisfactory answer, but that is the fact.
Indeed, the answer was not very satisfactory. I am certain that the House would agree that it was not satisfactory, and that the Select Committee did not consider it as satisfactory. If a Ministry lays a Statutory Instrument we are entitled to expect it to have given that Instrument some consideration. The Scottish Office said that it had given it no consideration, but had merely accepted the word of another Ministry that this was correct. Having accepted it, the Scottish Office let it go.
This is most unsatisfactory. The House is entitled to expect that when any Department produces a Statutory Instrument for its consideration it has not only given consideration to it, but has approved it. What the Scottish Office was saying was that it had given it no consideration at all. It merely accepted the recommendation of the Ministry of Health in this respect. This we find most unsatisfactory. This is a point of tremendous importance. I have always argued, as long as I have been a Member of the House, that the House is supreme. The Committees we appoint are appointed to look after the interests of the House and of the country.
The point raised in this Motion is extremely important. I add my thanks, if thanks be needed, to the Leader of the House, because I am told that without this agreement this Motion could not have been discussed tonight. We are indebted to the right hon. and learned Gentleman, but surely the House ought not to have to thank him for doing so. It should have the right to protect the interests of the House. So, while we are grateful to the right hon. and learned Gentleman, this discloses a weakness. We have to regard and protect the interests of the House of Commons.
If the Scottish Office is to produce Regulations of this kind we are entitled


to expect that it has given consideration to them and is not merely accepting the word of another Ministry. That is why I am a little disappointed that the Scottish Office, which is so culpable in regard to these Regulations, is not taking part in this debate. It should be doing so, but we shall listen with interest to the Minister of Health.

11.17 p.m.

The Minister of Health (Mr. Anthony Barber): I wish to express to the House my satisfaction that time has been found to debate this Motion. I had hoped that my hon. Friend the Parliamentary Secretary or I would have the opportunity at an earlier stage of speaking on the merits of the Regulations in question, but, for various reasons which have been referred to, the Prayer on the Order Paper was not reached.
I am now able to explain to the House why I believe some hon. Members have misunderstood the nature and significance of these Regulations. First, I say this to the House. It is sometimes assumed that only Members of Parliament are jealous of the control of Parliament over changes in the law. My hon. Friend the Member for Crosby (Mr. Graham Page) and I were trained as lawyers, as was my hon. Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) and the hon. Member for Islington, East (Mr. Fletcher). All those hon. Members' names appear in support of the Motion. Certainly, before ever I contemplated entering this House I was very conscious of the dangers which could arise from an excessive use of delegated legislation, or, if I may use the words in the Motion, the
unexpected use of the powers conferred
on the Executive by Parliament.
When, therefore, I read the Resolution of the Select Committee on Statutory Instruments, I considered the matter with great care. On one point I can give the House—my hon. Friend the Member for Buckinghamshire, South raised this in particular—a categorical assurance. If I had at that stage reached the conclusion that I had originally been wrong and that the doubts which have been expressed were justified, I would not have hesitated to amend the Regulations, but, for reasons I shall advance, I think—and, I hope, the House will see—that what my right hon. Friend the

Secretary of State for Scotland and I have done in this case is reasonable and that there is some misunderstanding about the application in this particular case of the important constitutional principle we have been considering this evening.
I fear that I must weary the House by explaining—as briefly as I can—the nature and purpose of the Regulations that we a re considering.
I will explain, first, that they are made under Section 10(7) of the Weights and Measures Act, 1963. This Section deals with units of measurement, and weights and measures lawful for use in trade. But, it excepts dealing in drugs from certain provisions and empowers the Minister of Health and the Secretary of State for Scotland to make Regulations about this aspect of the matter. The Regulations have two objects; first, to specify equivalencies between apothecaries' weights and metric weights, and to permit dealers in drugs to use the equivalents and, secondly, to require that, after certain dates, orders for certain drugs which are expressed in apothecaries' weights should be carried out in metric weights.
These Regulations represent a very important step in the complete change over in pharmacy to the metric system, and I have been told that the pharmaceutical industry already uses the metric system exclusively for the supply of bulk drug. I do not, therefore, think that there is any quarrel with the general intent of the Regulations, and the objections which have been raised tonight concern the way in which drugs for the second purpose which I have mentioned are defined. It has been argued that, by drawing the definition in terms of what is included in the British Pharmacopoeia and the British Pharmaceutical Codex, and any additions or amendments to them, we have removed from Parliamentary control the exercise of the discretion which the Act gives to Ministers and, further, that this represents an unexpected use of their discretion.
First, let me say something about the substance of this matter. Of course, this is not the end of this topic but I think that most hon. Members will consider this highly relevant. I do not think that anyone who considers this aspect will deny that, in substance, no real


diminution of Parliamentary control will result from the operation of these Regulations. It would have been perfectly possible for us to have drafted the Regulations in such a way as to limit their operation to what is at present in the 1963 editions of the British Pharmacopoeia and the British Pharmaceutical Codex on the basis that fresh Regulations would be made every time there were additions or amendments. We could have done it that way and so have avoided this difference of opinion, but I ask the House to contemplate the consequences of that.
To have done it would have resulted in a whole series of amending Regulations, together with uncertainty—not to mention inconvenience—among the profession without, in fact, increasing in any way the real Parliamentary safeguards.
There are two key points to be remembered. First, this is not a matter of Ministers exercising a discretion which is limited by the Act to certain drugs which are to be specified in subordinate legislation and on the exercise of which, therefore, Parliament must keep a watchful eye. The Act empowers the Ministers concerned to make Regulations in respect of specified dealings in drugs, and I would ask the House to note the relevant words of Section 10(7) which confers these powers. They are set out in two paragraphs which read as follows:
…the Minister of Health and the Secretary of State acting jointly may by regulations made by statutory instrument…
and then there are a few more words which I need not quote,
…prescribe what may be treated for the purposes of dealing with drugs, or the equivalent of, or of any multiple or fraction of, any unit of measurement which is or at the date of the commencement of this section was included in Schedule 1 to this Act in terms of any other such unit".
The next paragraph is also relevant, but I will read only that part which is relevant to what we are discussing. That is,
require that any person carrying out any such dealing with drugs as is specified in the regulations for the purposes of which the quantity of the drugs is expressed in terms of any such unit as aforesaid which is so specified shall carry out that dealing in terms of such equivalent quantity prescribed under paragraph (a) of this subsection as is so specified.

The words in question are:
…any person carrying out any such dealing with drugs as is specified in the regulations.…
I think that there will be no dispute that that paragraph is concerned primarily with categories of dealing and not categories of drugs. Under the authority of that Section, Regulations could have been made covering all drugs without any limitation whatever.
I do not see how exception could possibly have been taken to such a course if it had been thought wise to adopt it. The limitation in the Regulations to certain drugs is made solely for practical reasons because, by the nature of things, it is not possible to make a complete change-over at once. I repeat, as I understand it, under the authority of the enabling subsection, Regulations could have been made covering all drugs. The natural limitation, of course, is to dealings in those drugs for which standards exist from time to time in the standard works of reference used in dealings with drugs. There is, therefore—with respect to the hon. Member for Southampton, Itchen (Dr. King)—no real comparison here with the Building Standards (Scotland) Regulations, 1963, on which a similar point was taken by the Committee and which my right hon. Friend the Secretary of State has undertaken to amend.

Mr. Fletcher: I do not think that the Minister has followed the point. He is arguing that he could have made a different Regulation in which he could have proscribed all drugs. He says that the Act gives him power to make Regulations dealing with dealings. He has not done that, but has attempted to make a Regulation not about dealings but about specific drugs. He says he could have made one concerned with all drugs and has referred to future editions of the Codex, but how does he know that he will agree with some amendments that may hereafter be made?

Mr. Barber: I would agree because it is the policy of the Government—and there is no dispute between the two sides of the House on this—to change over completely to the metric system. It is purely a matter of convenience whether we do it at one go or from time to time.
I made the point that it would have been open to us to have covered all drugs merely because some hon. Members seemed to suggest that Ministers would not be empowered to do that. I think that, on reflection, having considered the words involved, they will agree that we could have taken that line.

Mr. Ronald Bell: Would not my right hon. Friend agree that while it might have been possible for him to have done that in a manner applying to all drugs, it would not have been right for him to have done it in a manner applying to such drugs as might be specified by X—X being someone outside Parliament?

Mr. Barber: I had intended to contrast what has been done in this case with what was done in the Building Standards (Scotland) Regulations, which my right hon. Friend the Secretary of State has undertaken to amend. Perhaps I can explain why I believe that there is no real comparison between these two sets of Regulations. Under Regulation No. 11 of those Regulations, an element of structure or other part of a building which consists of scheduled materials or which is constructed by methods conforming to scheduled specifications is deemed to satisfy the relevant provisions of the Regulations.
Obviously, changes in specifications under the Schedule may produce changes in the legislative effect of the Regulations on which the views of Parliament will not have been expressed. It is no doubt right that no such change should take place without the knowledge of Parliament. The references in the Schedule to the British Standards or Code of Practice were therefore intended to refer only to the edition as at the date of making the Regulations and there was no intention of securing an amendment under the Schedule without reference to Parliament.
With the Weights and Measures Regulations, on the other hand, it is quite clear that it would not be contrary to the wishes of Parliament if all drugs were in due course sold or supplied in accordance with the metric system. There is, therefore, no possibility of action on the part of a non-Parliamentary body going beyond what Parliament contemplated when this Act was considered.
The second key point is that, as I see it, it is no infringement of Parliamentary control and no unexpected use of the powers in the Act to define the drugs to which the prescribed equivalents apply by reference to the British Pharmacopoeia and British Pharmaceutical Codex current at the time of the dealing. Parliament has already accepted the principle that the British Pharmacopoeia and British Pharmaceutical Codex, as in existence from time to time, are compilations or dictionaries setting out standard thugs. It was said that these two books or volumes do not form part of the law, but I must remind the House that this is apparent not only from a variety of Statutes but also from a variety of Statutory Instruments.
I could refer the House to a number of examples, which I have here but I hope that it will suffice if I instance just one—the Pharmacy and Medicines Act, 1941, as amended by the Medical Act, 1956, which provided that no person might sell by retail any article consisting of or comprising a substance recommended as a medicine unless it is labelled with the appropriate designation. The appropriate designation is defined in the case of a substance not a poison and which is described in any monograph contained in the edition of the British Pharmacopoeia or British Pharmaceutical Codex current at the time the article was sold as the description set out at the head of the monograph. Furthermore, in that case in which reference is made to the Pharmacopoeia or Codex current at the time the article was sold, a specific statutory penalty attaches to non-compliance. It is apparent that Parliament recognised that the British Pharmacopoeia and the Codex were compilations produced by experts and that offences could properly be created in relation to certain events, even though Parliament did not know what would be inserted in future editions.

Mr. Fletcher: The Minister is quoting from an Act of Parliament. Obviously Parliament can do what it likes. But a Minister cannot do what he likes. He can do only what Parliament has empowered him to do.

Mr. Barber: There are a number of instances such as the Labelling of Food Order, 1953, which in the Third Schedule, paragraph 8, column 1, referred not only


to macaroni, spaghetti and Worcester sauce but also to
any preparation which is the subject of a monograph in the 1948 or any later issue of the British Pharmacopoeia, including the addenda thereto, or in the Formulary section of the 1949 or any later issue of the British Pharmaceutical Codex, including supplements thereto".
There are a number of other examples I have here which I could cite, but they only add weight to the same point.
There is one point which I should clear up. My hon. Friend the Member for Crosby made, if I may respectfully say so, the same mistake as I made in looking at Section 52 of the Weights and Measures Act, 1963, and in assuming that the penalties there laid down would be applicable to any deviation from these Regulations. I am informed—and on looking at it this seems to be correct—that the provisions of Section 52 of the Weights and Measures Act which provides for penalties do not apply to the Regulations made by the Secretary of State for Scotland and myself under Section 10(7). This, incidentally, is in contrast with the Act of 1941 as amended by the Medical Act, 1956. I take the point made by the hon. Member about that being a Statute and these being Regulations, but one reason why I am so relieved, at long last, to be able to unburden myself of this rather tedious argument is that it seemed to me that hon. Members might have misunderstood the precedents and what has gone before in this connection concerning the Codex and the Pharmacopoeia.

Mr. Graham Page: My right hon. Friend has said that Section 52—the offences Section—does not apply, but is there no penalty for breach of these Statutory Instruments?

Mr. Barber: Any enforcement would, as, I think, my hon. Friend anticipated, have to be sought on general principles of common law, but certainly no specific statutory penalty is laid down in Section 52.
If one examines Statutory Instruments referring to the British Pharmacopoeia or to the British Pharmaceutical Codex, it will be found that three different methods of drafting have been used depending upon the purpose for which the references were made. There may

be references to a particular edition or a reference to the British Pharmacopoeia without mentioning the particular edition, or to the British Pharmacopoeia as amended or to new editions or to the British Pharmacopoeia in force for the time being. These precedents show a diversity of approach because of the need, in particular circumstances, to refer either to a former edition of the Pharmacopoeia or to the current one or to future editions.
A reference to future editions was thought to be justified in the case of these Regulations in the same way as Parliament, in the 1941 Act, thought it necessary to refer to editions current at the time of the event or, in the case of another instance, if I may refer to it briefly, in the case of the Medical Act, 1956, where it was thought necessary to consider references in Instruments to Pharmacopoeias in use before 1862 in terms of the current Pharmacopoeia. The point I am making is that, with all respect to the views which have been expressed. Regulations which follow precedents set not merely in subordinate legislation, but also by Parliament itself, do not constitute an unexpected use of the powers conferred by the Weights and Measures Act.
To sum up, first, the provisions of Regulation No. 3, with which we are primarily concerned, are within the ambit of subsection (7) of Section 10 of the parent Act. I do not think that this is disputed. Secondly, to have made no reference to amendments or new editions of the Pharmacopoeia or the British Pharmaceutical Codex would have involved laying before Parliament a series of Statutory Instruments without, I suggest, increasing in any real way the Parliamentary safeguards. Thirdly, to have adopted this procedure would have involved not only considerable inconvenience, but, also, considerable uncertainty for those for whose benefit the Regulations were drafted.
The Regulations were drafted in full consultation with the medical profession, the pharmaceutical profession, the pharmaceutical industry, the General Medical Council and the Association's representative of the local food and drug authorities. As far as I know, no objection has been taken to the Regulations.
Finally, on the question of whether the Regulations involve an unexpected use


of the powers conferred by Statute, whatever hon. Members may previously have thought, I hope that the argument which I have advanced and the precedents which I have cited will have convinced them on reflection that all is well in this case.
I am not one of those who subscribe to the view epitomised long ago in the cynical couplet,
For forms of government let fools contest, Whate'er is best administered is best".
I must say that I adhere more to the views which have been referred to this evening and expressed by Lord Hewart and Professor C. K. Allen. I therefore welcome this chance of considering the important principle which lies behind this Motion, but this Motion is concerned with a particular Statutory Instrument, and I hope that, in the light of the explanation I have at long last been able to give about this case, my hon. Friend will seek leave to withdraw the Motion.

Sir James Pitman: May I ask my right hon. Friend this question? I gather that he is making two statements, first of all, that he as Minister in Regulations could have covered the totality, that is to say, all of the drugs; secondly, that it has been clearly the wish of the House to cover all drugs. But is it not the case that by what he has done he has allowed a body outside this House to make it legal, by removing certain drugs from a certain list, to prescribe and deal with these drugs in measures other than those which are covered in the Regulations? In other words, on both issues which he makes—it was wrong to have covered all drugs and that the House would wish to have covered all drugs—he has not done that, because he has given power to people outside this House to except, by leaving out of the Pharmacopoeia certain drugs which in future will be able to be administered or dealt with in measures other than those prescribed in the Regulations?

Mr. Barber: I am not sure that is right. I certainly agree with my hon. Friend that, as I understand it, the wish of the House, when the Weights and Measures Bill of 1963 was considered, was that in due course there would be a complete change-over to the metric system so far as drugs are concerned,

but in referring, as Regulation No. 3 does, to the Pharmaceutical Codex or in any amendment or any new edition thereof, what I was trying to say was that we were doing not only what I would have thought is obviously convenient, and does not detract from the real authority of Parliament, but, much more important in relation to the arguments which have been put forward tonight, that we were following precedents—I lave cited one or two—which are highly relevant, and that because of those precedents it really does not follow that what we are doing here involves, if I may use the words of the Motion, an unexpected use of the powers of the Minister under the Statute.

Mr. Fletcher: Does not the right hon. Gentleman realise that if, when Parliament passel the Act of 1963—only last year—Parliament had wished him, or wished to authorise him, to legislate in this manner, it could have done so by express wards, enabling him to make this kind of Order? It did not do so.

Mr. Barber: Yes, but again, with great respect, I referred as an example to the Labelling of Food Order, 1953, and I inquired again about the authority for the references there to the Pharmacopoeia and any addenda thereto, including the supplements, and I was told that there was no specific power to provide for it in this case by the parent Act.

11.44 p.m.

Mr. G. Mitchison: This really will not do. This is a quite simple master, and we have had a long speech from the Minister defending what appears to me to be, and what appeared to the Select Committee to be, a wholly unauthorised Order—unauthorised, of course, in only one respect, and I am not hire to talk about the practical importance of it one way or another. The point is that, if Ministers are to be judges of what matters and what does not matter, then they are exceeding their powers and exceeding the limited authority which this House gives them.
We have the Leader of the House and the Parliamentary Secretary to the Treasury here and I trust that the Government are not going to force this matter to a Division and ride away on a majority on a point which, small


though it may be, is of very real constitutional importance, as hon. Members on both sides have pointed out.
The Select Committee reported on a number of Orders and some have been withdrawn. Touched to the quick by any suggestions as to whether bulls should be licensed or not the Government immediately withdrew the Order. Steps have been taken about the licensing of bulls. It is only on this comparatively small matter that we have been driven to the rather remarkable steps we have had to follow tonight. Whilst I would join in thanking the Leader of the House for providing us the opportunity, I would also join in the observations by hon. Members that it really is a fault in our procedure that we have to depend on the good will of the Government in a question of this sort. This is really a quite simple constitutional point.
The Minister of Health, in his official capacity, was given certain powers, as was the Secretary of State for Scotland, by Statute. I am not concerned with the merits of what he did. He himself acknowledges that what could have been done by this Order could have been done, though more inconveniently as he sees it, by a series of orders. But these would not have left the decision in the hands of an anonymous collection of gentlemen who are editors of these two highly reputable publications. One has only to read the Order to see that the rest of the Order must depend on the decision—important or unimportant does not matter—of these gentlemen, who have not been elected by anyone and have no power to legislate and are in no sense responsible to the House.
Of course, any Government are occasionally a little apt to forget the elementary principles of democracy. That is what the Minister is forgetting today. We cannot allow that to pass. I hope that the Government will not insist tonight on going against the wishes of all those hon. Members who are present. No doubt this may be only one petty tyranny, but the result of one petty tyranny is that the Government are the judges of how many tyrannies are petty and how many can successfully be carried.
I do not suppose that in practice, this is a very important matter. But the point is that we cannot leave it to the Government of the day to decide what is important and what is unimportant in a matter of this sort. They must act within the authority given them and if that authority is in an inconvenient form, or obliges them to do things which involve a constant repetition of statutory Orders, that is the fault of the House—and of the Government for that matter—for introducing legislation in this form.
But once such legislation is introduced it is an elementary principle that it must be acted on strictly, because once one departs from it one leaves the Government themselves to be the judges of how far they may go in transgressing the law. All we heard from the right hon. Gentleman seemed to me to be utterly irrelevant. Supposing there are 21 or 51 cases in which something of the sort has been done before. Is it for us to examine each of them and say what are the distinctions between one case and another? I should have thought that we were not in the least called upon to do that, no more required to do it than when someone is not offered a house by a local authority and says that someone else on the housing list has had much better treatment. It is a simple question depending on the language of the Order and nothing else.
Our own Select Committee—after all, it is a Committee of this House—has decided—and in my view not only rightly but quite obviously rightly—that in this instance the Minister has gone beyond his statutory authority. Talk about an "unexpected" use of it! As my hon. Friend the Member for Islington, East (Mr. Fletcher)—to whom and to all the other members of the Select Committee we ought to be sincerely grateful—has clearly stated that "unexpected" means "unauthorised", I do not know why those concerned go on using the word "unexpected" when what they mean is "unauthorised," but there is no doubt that those two words mean the same thing.
There is not much I can say about it. But here we have the Leader of the House, the Parliamentary Secretary and the Minister. We have not heard from the Scottish Office. I am not altogether surprised. It did not come out of this


very well. It certainly did not do it. It followed the English with an almost pathetic obsequiousness which I thought had effectively been demolished at the battle of Bannockburn—but one never knows where one is getting to in these matters.
The plain English of all this is that the Government have made a mistake. The English Government have made a mistake which they are prepared to defend and which they ought not to defend. The Scottish Government have made a mistake simply by following the English. One way and another, the only reasonable thing to do, the only democratic thing to do and the only right thing to do is to admit the mistake and withdraw the Order; and on such a promise to the House no doubt the Hon. Member for Crosby (Mr. Graham Page) and my hon. Friends would be prepared to withdraw the Motion. There is no real alternative. I earnestly hope that we are not going lo be confronted by a display of force, which is singularly inappropriate when shown by lame ducks.

Mr. Barber: I have listened with interest and some concern to what has been said in the course of the debate. I did not seek at the outset to minimise the importance of the constitutional point that was being raised.
Although I am bound to tell the House that I still remain of the view that the Regulations do not make an unexpected use of the powers under which they are made, nevertheless the Secretary of State for Scotland, I am sure, and certainly I would not wish to do anything which might be taken to indicate dissent from those principles of Parliamentary control of which the Select Committee on Statutory Instruments and, indeed, all of us are rightly jealous and which have been emphasised on all sides this evening.
It is evident to me, although I still hold by the views which I have expressed, that opinions differ on the question of whether these Regulations are in truth an example of evasion of Parliamentary control. I certainly would not wish to press unduly my own views in the matter if the feeling of the House is against them, and I hope that I shall be respected as what is called a good House of Commons man for taking this view. If, therefore, my hon. Friend the Member for Crosby (Mr. Graham Page)

will withdraw the Motion, the Secretary of State for Scotland and I will be happy to look again at the matter.

Mr. Graham Page: I am grateful to my right hon. Friend, and I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

CROYDON AIRPORT SITE (REDEVELOPMENT)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]

11.55 p.m.

Sir Richard Thompson: The theme of this debate is to be the intolerable delay in the redevelopment of Croydon Airport, a large part of which lies within my constituency. My aim is to try to inject a sense of urgency in o the Ministry in order to bring about that which has not happened in a e last four and a half years—an early and proper redevelopment of this great asset.
It would be impertinent of me to weary the House or my hon. and gallant Friend the Parliamentary Secretary with a great deal of detailed history about the background of this matter. My hon. and gallant Friend will well remember it at when he was a back bencher and. I was in the Ministry the closure of Croydon Airport was a matter which exercised our attention for some years. There is very little I can tell him about it that he does not already know.
However, I will say this just for the record. After a very long and protracted wrangle, the airport was closed to flying on 30th September, 1959. It would be pointless to reopen the controversy at out all that. Nevertheless, I must say that both those who were critical of the decision to close the airport and the larger party which accepted that it was inevitable because of reasons of safety advanced at the time were somewhat reconciled to the prospect because they felt that the redevelopment of 418 acres of very valuable land close to London and urgently needed for a variety of purposes was a very reasonable quid pro quo for


the loss of an airport which had ceased to be viable at the time it was closed.
I do not have to dwell on the fact that of all commodities in and around London, land is by far the most precious. Every local authority is desperately short of land and Croydon Borough Council is among those authorities. It is fair to say that of the 418 acres involved, only 82 are actually in Croydon, the balance of 336 being in Beddington and Wallington. Croydon's acreage is much the smallest.
Nevertheless, all the local authorities having a share in this are concerned to see the land put to a useful purpose, whether as an open space, or for residential, or industrial purposes or, as is contemplated, a combination of the three. It is all the more astonishing that, four and a half years later, this magnificent site remains substantially in the same condition as it was then—unused, undeveloped and with no immediate prospect of being put to a fruitful use.
Even in its declining years as an airport, for charter, for executive and for club flying, it had had some limited value despite its small size. As an unused open space, it has none, It is simply a reproach to us all that we have this asset in our midst and are doing nothing to put it to good use.
I want to try to establish what has gone wrong and what we can do to speed up this process.
I have looked into this business pretty closely over the years, and have asked Parliamentary Questions, and so on. As far as I can see, the story goes something like this: the closure of the airport involved a change of use. That in turn involved the rezoning of the land under the Town and Country Planning Acts, and that of course led to the hearing of objections at a local public inquiry.
After consultations with the local authorities and the Government Departments concerned, proposals for an amendment of the county development plan were published in July, 1960, considerably less than a year after the airport was closed. There were a large number of objections, hence a public inquiry was held in October of that year. Since we are looking at the reasons for delay in all this,

it is important to mention that a very late objection made by the Royal Aero Club, which wished to keep the airport open for executive flying, was not finally disposed of until March, 1962.
Although I acquit my hon. and gallant Friend's Department of any responsibility in that part of the delay, I must say that it was utterly unreasonable to take so long to dispose of that particular objection. After all, the airport was closed primarily on the grounds of safety, and it ought not to have taken until October, 1962, to announce the provision of alternative facilities at Biggin Hill for executive and club flying. The delay at that stage was quite unreasonable, and in my view it cost the taxpayer very dear indeed.
However, by October, 1962, the Ministry of Housing and Local Government, which, pending the outcome of the Royal Aero Club's objection had suspended action on the other objections which were pending, announced its plan for the allocation of the land. There were to be 55 acres for industrial development, 120 acres for residential and school building, and 250 acres for playing fields and open space.
Then there followed a long wrangle with the local authorities concerned, Surrey and Croydon, over the disposal of the industrial land. A compromise was finally agreed and the industrial land was auctioned off in November of last year. Four years, more or less, from the date of closure of the airport everything seemed set for redevelopment to start. It had been a long time, but the statutory processes had seemingly all been gone through and we confidently expected that things would get moving at last. In fact, in the meantime the local authorities concerned had appointed a consultant to prepare a development plan—very comprehensive, ambitious and imaginative it was—and it was on that basis that it was hoped the airport would be redeveloped.
But then came the bombshell. On 27th August, 1963, the Ministry of Transport, in a Press release which I have here, disclosed that the line of the London—Crawley motorway might cross the site of the airport, and that a decision on the actual route which it would follow was to depend on the recommendations of consulting engineers who had been appointed in March, 1962.
We are now in April, 1964, and we have not had the report from the consulting engineers. They must have had plenty of time to consult almost everybody in sight, but despite the fact that the airport development had been so long delayed before they came on the scene, we still do not know what their recommendations are. I cannot think it right that this additional delay, arising out of all this further consideration of the route of the road, should be injected into the scheme at this stage. Surely it should have been possible to combine this planning with all the other planning being done by the other Ministries and by the local authorities earlier in the day.
The trouble now is that until we have the line of this proposed motorway definitely settled, and until we know when this decision will be announced, the development that we all need so urgently cannot proceed. I repeat that I have not yet discovered any reason why this road planning could not proceed earlier. How is it possible to proceed with any confidence in the planning of an elaborate and comprehensive development over a large area while uncertainty persists about the precise line which a motorway, probably more than 100 ft. wide, will cut through that area?
I have pressed the Ministry of Transport to show its hand on this matter more than once, by way of Parliamentary Questions, on 18th December and 14th January, and I have got this far: I have got the Minister of Transport to say that the road, if it passes through the airport at all—and even that has not been finally decided—will pass through that part which is designated for open space, for recreational purposes. But I have not been successful in getting a firm date when all this can be announced. That is one thing which, whatever else he tells me this evening, I earnestly hope that my hon. and gallant Friend will be able to disclose.
I accept that the Ministry of Transport's function in this matter may be relatively small. I realise that it is not responsible for the planning, and that it does not control the actions of the local authorities concerned. I realise that it was not involved in the original decision to close or not to close. Nevertheless, it is the timing of this final intervention by the Ministry of Trans-

port and it; failure to plan the route of this road earlier which has now injected this further and—in my view—quite unacceptable delay into the whole process. Three Ministries have been involved, and as many local authorities. All seem to have concentrated on their own bit of the problem, and it has never been anybody's business to view the matter as a whole and to say, "We must take a grip 3f this problem and recognise that our objective is to redevelop this priceless asset as quickly as possible". In other wards, we have lost sight of the wood because of the presence of so many trees. At no stage in the proceedings has it appeared to be the case that the ultimate objective has been uppermost in the minds of those involved.
I acquit my hon. and gallant Friend of the major responsibility here. He is in the unfortunate position of having come into the matter at a relatively late stage. I urge him to help us in our task of putting these 418 acres to early and fruitful use by at least letting us know when he will publish the line of this road. If h will do that and if he can tell us some reason for the delay in reaching a decision on the line of this route, he will, I believe, be doing something to ea.5 e great public concern which is now felt in Croydon and the areas of local authorities adjacent to it about the quite unbt4ievable delay which has taken place in putting this great asset of unused land to fruitful use.

12.10 a.m.

The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett): I am glad that my hon. Friend the Member for Croydon, South (Sir R. Thompson) has raised this matter tonight. As he hinted, I am not wholly unfamiliar with the area and I am well aware of the local anxiety caused by the shadow of the motorway. The debate tonight gives me an opportunity of laying something about the immensely difficult problems created when a great road is to be built through the heart of a great city. It also enables me to explain why the effect of this particular project on the redevelopment of Croydon Airport is not so serious as is popularly supposed.
In effect, my hon. Friend has asked two questions tonight—how far is the Ministry of Transport responsible for


delay in the redevelopment of the site, and why is the Ministry taking so long to come to conclusions about the line for the motorway? I shall answer the second question first.
The acquisition of land and property plays a big part in any road scheme. Before the line of the road can be decided we have to balance three factors: the engineering problems to be overcome, the cost of acquiring land and property and the social price to be paid in disturbance and damage to amenities. With the advent of motorways calling for widths of well over 100 feet, the acquisition of the land becomes increasingly difficult even in rural areas. In built-up areas its cost, including compensation for property owners, begins to loom much larger. As we draw near to a city centre it can become the dominating factor.
In olden times things were more simple. The Emperor Hadrian would have drawn a straight line and if that line happened to run through a town's new centre so much the worse for the town. Down it came and on went the road. Whether anyone objected, or was compensated we do not know, but I rather doubt it.
Today we order these things differently. An elaborate procedure laid down by Parliament has to be followed. Thus my right hon. Friend is under continuous and conflicting pressure: to build more roads and to build them faster, on the one hand, and to pay more heed to the rights of those whose properties lie in their path, on the other hand. This particular motorway is to run for some 30 miles from a point in south-west London to a point on the London-Brighton road a few miles south of Crawley. Anyone who uses the A.23 road will be familiar with the congestion which occurs from Crawley, northwards. It grows steadily worse, and we have wanted to relieve it for a long time. Even so, there are other motorways of higher priority and I fear that it will be impossible to start work on this one for several years.
It is likely to cost some £35 million money well spent the motoring public may say. Nevertheless, we have a duty to the taxpayer to keep the figure as low as possible, and property costs will play

a heavy part in the total. That is why those who plan a road like this are bound to cast envious eyes on any open space which may lie near to its route. I need not labour the point, because my hon. Friend is only too conscious of the immense value of the land in some parts of his constituency.
Surrey County Council suggested a line for the road as far back as 1959. That line raised some difficult problems both in the urban sector and in the more rural sector further south. As the time approached for preparatory work to begin, my right hon. Friend decided that a further extensive survey was necessary before a decision could be reached. This survey was put in hand in the spring of 1962. That, let me say in passing, was the right time to begin, for to have started earlier would have been too much ahead of the likely starting date for the motorway.
The work was entrusted to consulting engineers since pressure of work on the county engineer was at that time very heavy. That is now complete, and we hope to receive the consulting engineers' final report in a few days' time. Their task has been a most formidable one in which the land and property problems in the urban part of the route have loomed large. But that is not to say that a route through the airport site will necessarily be chosen. That is still no more than one of several possibilities, but less property in this section will have to be bought and demolished if the road runs through the airport. However, against this, the open space will be bisected, and its recreational value reduced. We shall have to weigh these two factors one against the other, but not in isolation. The road neither begins nor ends at the airport, and the total effect of the whole route on property and amenities will have to be considered in comparison with all the alternative lines; so, also, must be the relative merits of each route from the point of view of traffic.
Both of the lines examined present difficult problems, and it is not in the least surprising that the consultants should have taken just over two years to prepare their report. Their recommendations will be carefully studied as a matter of urgency, and my right hon. Friend will decide upon a draft scheme as soon as possible. The choice will not be easy. A great deal of further


consultation with the public authorities who are concerned will be necessary before the proposed line can be published, and then laid open to formal objection.
I freely admit that the whole process takes a long time, and I regret the uncertainty that it must create in people's minds while it is going on; but, bearing in mind the enormous volume of work, I say that it is inevitable. The alternative is to abandon the idea of bringing motorways nearer to the heart of our great cities.
Now I come to the other question—how much has the Ministry of Transport delayed the redevelopment of the Croydon Airport site? The answer to this is that we have done nothing at all to delay redevelopment of zones for houses, schools and industry, and the possibility of a motorway across the open part of the zone began to act as a delaying factor only at about the beginning of this year. Let me recall some dates and some facts, already referred to by my hon. Friend.
As he has said, Croydon Airport was closed in September, 1959. Surrey County Council and the County Borough of Croydon then formulated proposals for the broad lines of its redevelopment, and these proposals were the subject of a public inquiry into objections, held locally, in October, 1960. Among objections was one from the Royal Aero Club, which objected to any development which would preclude the future use of the land as an airfield, on the ground that the growing importance of business executive flying called for facilities within easy reach of London and that no other airfield was available. This necessitated the study of alternative airfields, and it was not until March, 1962, that it was possible to announce that facilities for private and executive flying would be made available at Biggin Hill.
In the same month, the provisional decision of the Minister of Housing and Local Government about the development plan was made known to the two planning authorities.
He accepted in principle their proposal that much of the site should be used for playing fields and public open spaces, and that the smaller parts of it should be used for houses, schools, and industry. He differed a little from them

over the relative sizes and shapes of the various zones, and over the density of the proposed residential development. His provisional decision was the subject of further formal consultations, and it was also laid open to the public for objection. This was confirmed in October, 1962.
At that date, which was shortly after the motorway survey had been put in hand, no decision could be taken on whether or not the motorway would cross the airport. It would have been quite wrong to hold up the airport development until this could be decided, and we did not do so. The consulting engineers therefore examined the situation at the airport as one of their first tasks and they reported their conclusions in December, 1962. These were communicated to the Ministry of Housing and Local Government and the Ministry of Aviation, and it must be remembered that the latter Department still owned the land on which the airport stood and that the former was still concerned with planning policy.
We all agreed—that is, the three Departments—that disturbance to the zones for louses, schools and industry must be molded. Detailed planning on the redevelopment of these parts of the site was already proceeding and is now well advanced. We also recognised that the scale and importance of the motorway project was such that the possibility of a motorway line across the remainder of the site must be kept open. It was thought that this could be done without real prejudice to the pace of preliminary work on redevelopment of the open space which, for a variety of reasons, was at that time a good deal less rapid.
These principles were settled during the first half of 1963 and, to minimise the effects of a possible motorway on the residential zone, it was further agreed that no motorway line should come within 650 feet of it. The local authorities were so informed in confidence at once and my right hon. Friend authorised a public announcement of the agreed inter-departmental policy in August, 1963. The occasion of this announcement was the impending sale by public auction of the land zoned for industrial use, and one of its objects was to let intending industrial purchasers know that there might one day be a motorway close to the plots for sale.
My hon. Friend will, therefore, see that the motorway project has so far done little to delay the redevelopment of the airport site. The solution early this year of other problems affecting the open zone now makes the possibility of a motorway across it the main cause of delay. The Ministry of Aviation has accordingly suggested to the local authorities that they might like to use part of it for recreational purposes, on a temporary basis.
I can assure my hon. Friend that no avoidable delay in arriving at its permanent layout will be permitted. My right hon. Friend will do all in his power to publish a draft scheme showing the line of the motorway as soon as practicable. I very much hope before the end of the year.

Question put and agreed to.

Adjourned accordingly at twenty-two minutes past Twelve o'clock.